The Chancellor has announced a new loan scheme over fears millions of small and medium-sized businesses (SME’s) would not survive through the coronavirus lockdown, after businesses complained the previously announced support through Coronavirus Business Interruption Loan Scheme (CBILS) was taking too long to come through.
Under CBILS, firms with turnover of up to £50m can apply for loans of up to £5m with 80% of the debt backed by the government
The new Bounce Back Loan Scheme (BBLS) will help SME businesses to borrow up to 25% of their turnover up to £50,000. These loans will be 100% guaranteed by the tax payer and there won’t be any fees or interest to pay for the first 12 months.
Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan.
The Chancellor has revealed that businesses will just need to complete a “simple, quick, standard form online”, while banks will not need to perform any “forward looking tests of businesses viability”, indicating that forecasts will not be required to access BBLS.
Businesses will be eligible if they are based in the UK, negatively affected by coronavirus and was not an ‘undertaking in difficulty’ on 31 December 2019. There are a small amount of ineligible sectors such as insurers, public sector, universities and schools.
Note that you cannot claim BBLS if you have already received a loan under CBILS. If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into BBLS, you can arrange this with your lender until 4 November 2020.
The scheme will launch for applications on Monday 4 May. Firms will be able to access these loans through a network of accredited lenders. Haslers will be able to assist with accessing these funds.
Government to launch bounce back loan scheme for SME businesses