Bounce Back Loan Scheme (BBLS)
Introduction and those covered by the scheme
A large number of the country’s smallest businesses have been having difficulty meeting the lending criteria set by banks for them to access the Coronavirus Business Interruption Loan Scheme (CBILS), and consequently have not managed to get much needed help with their cash flow in the current crisis.
The government therefore announced last week this new ‘easier access’ facility – the BBLS – and has made applications available from Monday 4 May 2020, through a number of accredited lenders, mainly the high street banks.
A full list of the accredited lenders is shown on the British Business Bank website.
Your application must be made direct to one of these. The application process is to stay open until 4 November 2020.
Unlike the CBILS facility, this is restricted to a straightforward term loan and no other variants of lending exist. The government guarantees to the lender 100% of the remaining balance of the loan and you will not have to suffer the interest for the first 12 months nor pay any fees for it.
If you run a business as a sole trader, partnership or limited company and need financial help by way of a loan, and you can be confident that you will be able to repay it, in the first instance visit your own bank’s website and search for Bounce Back Loan. The indications are that you should be able to have the money in your business bank account within a matter of days.
If your current bank is not accredited, you will need to apply to one that is and there will be some additional work to be done in becoming a customer of that bank before you can proceed with the application.
The application is to be made online with the lender and is largely a self-certified one; you need to be able to confirm the following criteria apply to your business:
- The business is based in the UK;
- It has been negatively affected by the Coronavirus pandemic;
- It was not in difficulty at 31 December 2019;
- You must not have claimed under the CBILS;
Amount of Loan and Terms
The amount of the loan you can apply for is between a minimum of £2,000 and a maximum £50,000, but this maximum is limited to 25% of your turnover.
It is repayable over a term of up to 6 years but you can repay early without any penalty.
The interest rate is a fixed 2.5% per annum and the government will pay you an amount (a Business Interruption Payment – BIP) to cover the first year’s interest.
No repayments are due to be made in the first 12 months.
You remain principally liable for the debt.
Action you need to take
We advise that you take the following actions as soon as possible
- Start by doing a cash flow projection. We suggest that you set this out on a monthly basis and that it covers a period of at least 12 months and possibly longer if you foresee that you will need extra cash over a longer period. This doesn’t have to be as onerous as would be required for normal bank lending or for the CBILS measure. However, it will inform you of your expectation of when you are likely to see your cash or profit position most severely affected by the coronavirus crisis, and critically when you hope it will return to a more normal position. It will also help you to decide how much funding you will need to apply for.
- If you don’t need a loan, that’s fine and you can for now do nothing further in respect of an application (but see point 5 below).
- Decide on how much loan you will need, how much you will be able to afford to repay when you need to start repayments after 12 months, and therefore what term you will need the loan to be for.
- Visit your own bank’s website and search Bounce Back Loan, then click on the ‘Apply’ button and follow the process. Have ready your current bank account and your own personal details such as date of birth, National Insurance number etc.
- If you don’t currently need or get a loan, we advise that you revisit this process of actions in future as needs dictate, and before 4 November 2020 to see if you need to apply later for finance that is then needed.