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Yesterday (27 April 2020), Chancellor of the Exchequer Rishi Sunak announced another policy (Bounce Back Loan scheme) measure designed to support small businesses through the coronavirus outbreak.
Announcing the 100% state-backed Bounce Back Loan scheme in the House of Commons, the Chancellor outlined the “simple, quick and easy” solution for those in need of smaller loans.
In this blog, we explore the policy, what it means for small businesses and how those in need can access the cash.
“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 yesterday’s announcement of the new micro-loan scheme.
Available from next Monday (4 May 2020), the scheme is the latest initiative in a raft of recent policy measures deployed to protect businesses from the economic impacts of coronavirus.
Speaking in the Commons yesterday, Sunak announced that most firms should expect to receive the loan 24 hours after approval.
In a further move to address the prevailing concern about existing government support, the Chancellor aimed to reassure lenders and borrowers.
The Government will underwrite 100% of the new micro-loans, pay the interest for the first 12 months and work with a network of accredited lenders to agree on a favourable rate of interest for the outstanding period of the loan.
Other Government 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.
- It must have been negatively affected by coronavirus.
- It must not have been a business in difficulty on 31 December 2019.
Things to consider
Applications to the Bounce Back Loan scheme are not open to small and medium-sized business that are currently receiving support under the CBILS.
However, loans of up to £50,000 under CBILS are transferable to the Bounce Back Loan scheme, but this needs to be arranged with the lender before 4 November 2020.
How to apply
In his remarks to Parliament yesterday, Sunak stated that the application process will involve businesses completing a “simple, quick, standard form”.
The new scheme will launch on 4 May 2020. Further details about the scheme will be released shortly.
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.