Bounce Back Loan Scheme (BBLS)
What is it?
The Bounce Back Loans scheme will offer loans from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower. On 2 November, the BBLS rules were amended to allow those businesses who have borrowed less than their maximum (i.e. less than 25% of their turnover) to top-up their existing loan. Businesses will be able to take-up this option from week commencing 8 November and they can make use of this option once. The Government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. The government has then set the interest rate for this facility at 2.5% per annum for subsequent years. No repayments will be due during the first 12 months. Length of the loan is for six years. There will be a short, standardised online application to apply for a loan. new ‘Pay as You Grow’ flexible repayment system will provide flexibility for firms repaying a Bounce Back Loan. This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
Businesses will be given until the end of March 2021 to access the Bounce Back Loan Scheme. Further information can be found here.
Am I eligible?
Your business must be able to self‑declare to the lender that it:
- has been impacted by the Coronavirus pandemic.
- was not a business in difficulty at 31 December 2019 (if it was, you must confirm your business complies with additional state aid restrictions under de minimis state aid rules).
- is engaged in trading or commercial activity in the UK and was established by 1 March 2020.
- is not currently using a government-backed Coronavirus loan scheme, unless the Bounce Back Loan will refinance the whole of the CBILS, CLBILS or CCFF facility.
- is not in bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance.
- derives more than 50% of its income from its trading activity (this requirement does not apply to charities or further-education colleges).
Bounce Back Loans are available to businesses in all sectors, except the following:
- Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive)
- Insurance companies
- Public-sector organisations
- State-funded primary and secondary schools
The borrower remains fully liable for the debt.
What do I need to do to access it?
You will need to fill in a short application form online, which self-certifies that your business is eligible for a loan under BBLS. If your business is eligible, it will be subject to appropriate customer fraud, Anti-Money Laundering and Know Your Customer checks. Some state aid restrictions may apply to your application.
Who do I need to speak to?
You should speak to your business banking provider or one of the accredited lenders. With high demand for BBLS facilities, finance providers recommend that you approach a lender via their website. Phone lines are likely to be busy and branches may not be able to handle enquiries in person.