The Bounce Back Loan Scheme (BBLS) was first announced by the Government on 27 April, with the scheme opening on 4 May 2020. The Scheme was aimed at SMEs to claim a ‘bounce back loan’ of up to £50,000.
The Bounce Back Loan Scheme closed to new applications and top-up applications on 31 March 2021.
The following FAQs provide reference and guidance for those who have applied to the scheme.
How much is the loan?
The loans will range from from £2,000 up to £50,000 but are limited to 25% of turnover.
Who is eligible for the scheme?
Any UK based businesses, not including banks, insurers, public sector bodies, further education establishments (if grant funded) and primary and secondary schools.
Are sole traders and partnerships eligible?
Yes, sole traders and partnerships are all eligible.
What are the terms of the loan?
- 100% government guaranteed
- Interest free for the first 12 months
- Lending period of up to 6 years
- No repayments in the first 12 months
- Suggestion of ‘low’ interest rates
- No limit on turnover or business size
A new ’Pay as you grow’ scheme was announced in September, meaning that the term of any existing BBL can be extended from the current 6 year term to 10 years.
Businesses who are continuing to struggle as a result of the crisis can also choose to repay these loans on an interest only basis, with anyone in real trouble being able to apply to suspend the repayments altogether for up to 6 months. Rishi Sunak confirmed that doing so would have no impact on credit ratings.
Is security required?
No security is required for the Bounce Back Loan. The application process expects businesses to prove they were not an ‘undertaking in difficulty’ on 31 December 2019. Generally, this means your balance sheet shows a positive Net Asset position as at 31 December 2019 and nothing significant has happened since to put the
What’s the application process?
The application process will be a short online application form. There will be no viability test but there will be fraud checks.
The business must be trading as of 1 March 2020 and provide proof that the business was not an ‘undertaking in difficulty’ on 31 December 2019.
How do I prove that my business was not an ‘undertaking in difficulty’ on 31 December 2019?
This could be through management accounts or submitted accounts as at 31 December 2019.
In terms of the maximum borrowing limit, you may have to prove your turnover from the past 12 months, and this can be done using management accounts, VAT returns or your bank statements.
When did the scheme open?
The scheme opened at 9am on Monday 4 May.
Should I apply for the Bounce Back Loan or CBILS?
It depends how much support you need. If your requirement is greater than £50,000 the BBLS isn’t going to be for you. If less than £50,000 if required, however, we would recommend the BBLS as it will be a much more straightforward process and cash should be advanced quickly.
In some cases, it may be sensible to apply for the BBLS initially and contemplate a CBILS loan thereafter. We would recommend applying in that order as an ongoing CBILS application will prevent your ability to apply for BBLS.
If you have more than one business can you apply for each business?
There are likely to be certain checks carried out to prevent fraudulent activity through multiple applications. Genuine businesses may be able to obtain more than one loan but we are aware of some restrictions. We would recommend talking to your lender if you have multiple group businesses seeking BBLS support.
Do I have to apply through my current bank?
You are not required to apply through your existing bank for the Bounce Back Loan. You can apply through alternative lenders.
Are there any early repayment fees?
At the moment the guidance states ‘no fees’ but that is likely to apply to the set-up fee. The finer details on early redemption penalties have not yet been made clear and these may vary as with CBILS.
The next step
We can help you identify the extent and duration of your funding requirements and determine the interactions with other announced support (the Coronavirus Business Interruption Scheme and Coronavirus Job Retention Scheme for example).
We can help you raise finance through your current bank and/or alternative lenders, leaving you to continue to run your business during these unprecedented times. We have access to participating BBLS lenders and can make one online application through our online portal. We will liaise with potential lenders and, providing you meet the qualifying criteria, arrange funding on your behalf.
If you would like to discuss the support we can provide for your business during this difficult time, please contact your usual UHY adviser or complete the contact form.