The business of Bounce Back loans: What you need to know
Wed 15th July 2020
The bounce back loan is part of the Governments initiative to stimulate growth in businesses struggling due to the ongoing COVID-19 crisis
Written by Adiel Khan Business Advisor at South East enterprise
The bounce back loan (BBL) is part of the Governments initiative to stimulate growth in businesses struggling due to the ongoing COVID-19 crisis.
To date, there have been over 600,000 businesses who have benefited from the BBL scheme with close to £19billion of financial support approved.
What is the Bounce Back Loan
The bounce back loan started in March 2020 and is financial support actioned by the Government in reaction to COVID-19. It was designed for businesses who are losing revenue and experiencing financial problems as a result of the COVID pandemic.
The lenders of this type of loan are the British Business Banks (BBB) accredited lenders including major high street banks such as Barclays, NatWest, TSB and the Bank of Scotland as well as many more
See the full list on the BBB website.
How Does the Bounce Back Scheme Work?
You must apply through one of the approved lenders as listed on The British Business Bank websites accredited lenders. (see above)
You can apply for finance, starting from £2k up to 25% of the business's turnover.
The maximum amount a business can borrow is £50,000 at an interest rate of 2.5% per annum.
You do not need to pay for the first 12 months as the Government pays the fees and interest for this period.
The Government fully backs the loan. The Government also guarantees the loan amount and the interest to the lender.
Key Features of BBL
Borrow from £2000 to a maximum of 25% proven revenue
Borrow a maximum of £50,000
Annual interest rate capped at 2.5%
Maximum term six years
Major high street banks involved in the scheme
Open to ALL businesses affected by COVID-19
Guaranteed by the Government to the lender (Capital & Interest)
You don't make any payments for the first 12 months
The Government pays fees and interest for the first 12 months
Lenders are not allowed to take recovery action over borrowers personal assets such as a home or Vehicle
There are NO fees to access the scheme
The borrower remains liable for the whole capital borrowed
How to Apply for the BBL scheme
Step 1. Find a Lender by checking the approved lenders on the BBB website (British Business Bank)
Step 2. Approach the lenders online through their webpage dedicated to the BBL scheme.
It is advisable to approach the lender you are currently banking with first. If you are unable to access the finance, you require then try another lender.
You will find a short application form online that self certifies that your business is eligible for the BBL scheme.
If the eligibility is approved, you will go through the regular customer fraud checks such as (AML) Anti Money Laundering and (KYC) Know Your Customer.
Be aware: State aid restrictions may apply on approval of the loan.
Step 3. The lender will check your application and either approve the loan or reject it. The discretion lies with the lender.
The lender is NOT permitted to take:
A personal guarantee from you
Take recovery action on your personal assets such as car or home.
If your loan is rejected, you can still try another lender running the scheme.
Eligibility Criteria for the Bounce Back Loan:
Your business will 'self declare' to the lender the following:
The business has been financially impacted due to the COVID-19 pandemic.
Your business is NOT currently benefiting from the Coronavirus Business Interruption Loan Scheme (CBILS) or the Bank of England's COVID Corporate Financing Facility Scheme (CCFF) or The Large Business Interruption Scheme (CLBILS). Unless the Bounce Back Loan (BBL) will refinance the whole of these schemes. CBILS, CLBILS or CCFF.
The business derives more then 50% of it's income from trading activities. This does not apply to Educational colleges or charities.
The business sector is eligible. Non-eligible sectors include (Insurance companies, credit institutions, state-run schools and public sector companies)
You can contact South East enterprise to find out more from one of the advisors if you are a Greenwich based business.