28 April 2020
Yesterday the government announced their latest form of funding to further prop up the UK economy. With effect from 4 May 2020 we expect many small and medium sized businesses to be able to claim for a ‘bounce back loan’ for up to £50,000.
The terms of these loans are as follows:
- 100% guaranteed
- Interest free for the first 12 months
- No fees
- Lending period of up to six years
- No repayments in the first 12 months
- Suggestion of ‘low’ interest rates
Applications for this scheme are expected to be far more straight forward than the Coronavirus Business Interruption Loan Scheme (CBILS), with only a short application form and basic financials required (the finer details are yet to be released). But maybe most importantly, the applicant only has to prove they were not an 'undertaking in difficulty' on 31 December 2019. One of the challenges being faced through CBILS application is the ability of businesses to service these loans in the future due to significant levels of uncertainty.
These bounce back loans should be a welcome option for many, and it may be argued that even for those businesses who are currently not forecasting a requirement for debt, having an interest free loan that can be repaid in 12 months brings some useful flexibility.
The scheme will be delivered through accredited lenders in a similar way to CBILS, albeit via an online application form, and they will only be available to businesses based in the UK. Those that cannot apply include banks, insurers, public sector bodies, further education establishments (if grant funded) and primary and secondary schools.
Finally, if you already have a CBILS loan that is less than £50,000 you have the option of transferring to the Bounce Bank Loan Scheme any time before 4 November 2020.
Should you have any question on the above or need any support, please call Stuart Hutchison on 07590 440643 or email him at s.hutchison@uhy-cambridge.com
