Following Chancellor Rishi Sunak’s announcement last week the Bounce Back Loans Scheme opens for applications from today
The loans accredited by the British Business Bank target small and micro businesses in all sectors to help them during the national lockdown implemented since March 23rd, forcing many outlets to close or cease trading.
The loan scheme is in conjunction with other funding options provided by the government to assist businesses during the coronavirus epidemic, including the Coronavirus Business Interruption Scheme and the Future Fund scheme (which will issue convertible loans between £125,000 to £5 million to innovative companies).
What are the scheme features?
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.
Are you eligible
Businesses from all sectors can apply for a facility, however, you must prove to the lender the following:
Confirm you are a UK-based business in activityAnd established by 1 March 2020.
Confirm you have been adversely impacted by the Coronavirus.
Confirm you are not currently using a government-backed Coronavirus loan scheme.
Confirm you are not in bankruptcy, liquidation or undergoing debt restructuring.
*For more information please visit British Business Bank*