On Tuesday (27th of April) chancellor, Rishi Sunak announced a new government-backed loan scheme for small business.
The scheme entitled the “Coronavirus Bounce Back Loan” will allow small businesses to borrow between £2,000 and £50,000 and access the cash within days.
Loans will also be interest-free for the first 12 months, and businesses can apply online through a short form.
“Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis, commented Sunak.
“This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses” he added.
You can apply for a loan if your business:
- is based in the UK
- has been negatively affected by coronavirus
- was not an ‘undertaking in difficulty’ on 31 December 2019
“Responding to pressure from small business, chancellor Rishi Sunak has, at last, announced guaranteed access to loans of up to £50,000 within 24 hours of SMEs applying. These will be available from next Monday 4 May” comments Brian Palmer, tax policy expert and former AAT (Association of Accounting Technicians) President.
“The loans underline the crisis many small firms are currently facing and therefore the Chancellor has guaranteed generous repayment terms. Loan terms are for up to 6 years, no repayments will be due during the first 12 months and there won’t be any fees or interest to pay for the first year.
However, SMEs need note that you can only apply for a loan if your business was not an ‘undertaking in difficulty’ as of 31 December 2019. Equally, you’re excluded from qualifying if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).
That said, if you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender between now and 4 November 2020.
The launch of the Bounce Back Loan, supported by government guarantees, a low rate of interest, no arrangement fees and a 24-hour turnaround is just the sort of thing that small businesses have been crying out for.
The loan amounts aren’t huge but are significant enough to be of immediate help. However, there will be some fears that when lockdown is eased, the bounce back may not be robust enough to enable small businesses to meet the repayments.”
**For more information please visit Gov.co.uk**
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