Yesterday (17 December), Chancellor of the Exchequer Rishi Sunak announced the extension of the 100% state-backed Bounce Back Loan scheme application deadline to support small businesses through the coronavirus outbreak.
In this blog, we explore the policy, new application deadline of 30 March 2021, what it means for small businesses and how to access the funds.
Estimated reading time 2:00 minutes
Updated: 17 December 2020
The Bounce Back Loan scheme has been extended until 30 March 2021.
“Never before have we been able to do something of this magnitude in such a short space of time,” was the galvanising address of the Chancellor during his announcement of the new micro-loan scheme back in April.
Available from 4 May 2020, the scheme has been a core component of the Government’s policy measures deployed to protect businesses from the economic impacts of coronavirus.
Other initiatives announced recently include the:
- £1.25 billion support package to help fast-growing firms
- Coronavirus Job Retention Scheme (CJRS)
- Coronavirus Business Interruption Loan Scheme (CBILS).
Small and medium-sized businesses will be able to apply for the micro-loans for 25% of their turnover, from £2,000 up to a maximum of £50,000.
However, the following eligibility criteria apply:
- The business must be based in the UK
- The business must have been established before 1 March 2020
- It must have been adversely impacted by the coronavirus
Since 10 November 2020, participating lenders have been able to offer smaller business across the UK a ‘top-up’ to their existing Bounce Back Loan, as long as the original amount borrowed was less than the maximum permitted.
More information can be found on the Bounce Back Loan FAQs on the British Business Bank’s website.
Things to consider
- The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
- The government guarantees 100% of the loan. There will be no fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% per year.
If a business has already received a loan of up to £50,000 under one of these schemes it can be transferred into the Bounce Back Loan scheme. This must be arranged by 31 January 2021.
You cannot apply if you’re already claiming under:
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Coronavirus Large Business Interruption Loan Scheme (CLBILS)
- COVID-19 Corporate Financing Facility
However, if a business has already received a loan of up to £50,000 under one of the schemes it can be transferred into the Bounce Back Loan scheme. Businesses have until 31 January 2021 to arrange this with the lender.
How to apply
There are 28 lenders participating in the scheme including many of the main retail banks.
Eligible businesses must fill in a short online application form and self-declare eligibility.
The lender will decide whether to offer a loan or another type of finance.
The borrower always remains fully liable for the debt.
BBLS is available through a range of British Business Bank accredited lenders and partners, listed on the British Business Bank website.
How Isosceles can help?
At Isosceles, we have been supporting our clients during this uncertain and challenging time by conducting scenario planning, implementing contingency measures and forecasting cash flows.
Please get in touch if you think we can help.
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