Yesterday saw the launch of the governments Bounce-Back Loan Scheme (BBLS) which has been set up to help small and medium-sized businesses affected by coronavirus access loans of up to £50,000.
All major banks saw significant demand for the scheme and by the end of yesterday afternoon around 100,000 applications had been received exceeding the entire amount of completed applications collected under the Coronavirus Business Interruption Loan Scheme since its launch over a month ago.
The Treasury has stated that funds should be available ‘within days’ of a successful application with Barclays suggesting once an application had been approved the money may reach accounts within 24 hours.
Huge demand on day one for BBLS.
- Lloyds received 17,000 applications, HSBC 12,830 and Santander 10,500 applications by lunchtime, while RBS had 22,000 by 2pm
- Barclays was the only lender to confirm the number of approvals it had made for BBLS loans, totalling 6,000 and worth £200m, by mid-afternoon yesterday
- HSBC look to be the only large lender offering BBLS to non-customers but businesses are being told that they may have to wait seven days to have 'feeder accounts' set up to have the money put in
- Only 10 lenders currently accredited for BBLS, though this does cover the big four lenders
Description of BBLS:
The Bounce Back Loan Scheme enables businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year. The government will cover interest payable in the first year.
- Up to £50,000 loan: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower
- 100% guarantee: The scheme provides the lender with a government-backed, full guarantee (100%) against the outstanding facility balance, both capital and interest. The borrower always remains 100% liable for the debt
- Interest rate: The government has set the interest rate for this facility at 2.5% per annum, meaning businesses will all benefit from the same, low rate of interest
- Interest paid by government for 12 months: The government will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs
- No principal repayments for first 12 months: Borrowers will not have to begin principal repayments for the first 12 months, thereafter capital will be repaid on a straight line basis
- No guarantee fee for businesses or lenders to access the scheme
- Finance terms: The length of the loan is for six years but early repayment is allowed, without early repayment fees
- No personal guarantees: No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle
Eligibility criteria and how to apply:
Businesses should check the British Business Bank website to check their eligibility and to find out which lenders provide BBLS.
These are accessible HERE
For more information please visit: