Bounce Back Loans Scheme Extended and Rules Eased
Small and medium sized businesses can now top-up the amount they borrowed in the Bounce Back Loans Scheme, if they were entitled to more. However, the request to top-up must be filed by the 31st January!
Last week, it was announced by the chancellor that the rules to claim in the Bounce Back Loan Scheme were to be eased. The scheme allows SMEs to borrow up to 25% of their turnover: between £2,000 to £50,000.
The government guarantees 100% of the loan, and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
Find out if your business is eligible
You can apply for a Bounce Back Loan if your business:
- Is based in the UK
- Was established before 1 March 2020
- Has been adversely impacted by the coronavirus
If your business was classed as a business in difficulty on 31 December 2019, you’ll need to confirm that you are complying with additional state aid restrictions.
Who cannot apply
Businesses from any sector can apply, except:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
If you’re already claiming funding
You unfortunately can’t 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 you’ve already received a loan of up to £50,000 under one of these schemes, you can transfer it into the Bounce Back Loan scheme. You have until 31 January 2021 to arrange this with your lender.
How long is the loan for?
The length of the Bounce Back Loan is 6 years, but you can repay it early without paying a fee. It’s also been announced that no repayments will be due during the first 12 months.
Before your first repayment is due, your lender will contact you about further options to:
- extend the term of your loan to 10 years
- move to interest-only repayments for a period of 6 months (you can use this option up to 3 times)
- pause your repayments for a period of 6 months if you have already made at least 6 repayments (you can use this option once)
How to apply for a Bounce Back Loan
There are 28 lenders participating in the Bounce Back Loans Scheme: including most of the main retail banks. You should approach a suitable lender yourself via the lender’s website, where the lender will then ask you to fill in a short online application form and self-declare that you are eligible.
The lender will decide whether to offer you a loan or another type of finance, and you’ll then be responsible for repaying 100% of the amount borrowed.
If you want to discuss what applying for a loan would mean for your business, or you would like some business advice or accountancy guidance, get in contact with us today.
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