Government announces 12-month interest-free small business “Bounce Back Loans” scheme with £50,000 limit and 100% guarantee.
At last, the UK’s smallest businesses will have guaranteed access to loans of up to £50,000 within 24 hours of applying, chancellor Rishi Sunak announced yesterday. But why has it taken so long for him to realise that the current bailout loans schemes are failing the small business community?
The new “bounce back loans” will be 100 per cent guaranteed by the Treasury, meaning the government will take on all the default risk, and will be available from next Monday 4th May at 9am.
Sunak said banks will not need to perform any “forward looking tests of businesses viability” and that businesses would need to fill out just a “simple, quick, standard form”.
It is also understood that applicants will not even need to provide proof of turnover in the application process.
“I know some small businesses are still struggling to access credit – they are in many ways the most exposed to the effects of the coronavirus,” Sunak said.
“They will need extra support to get through this crisis. Some businesses will not want to take on more debt…but for some others loans will be a part of the answer.”
The new loans are being managed separately from the government’s £330bn coronavirus business interruption loans scheme and the few small businesses that have already received a CBILS loan will not be eligible for a bounce back loan.
As a result just over 20,000 loans at a value of less than £3Bn have been approved in the scheme’s first month.
Shadow chancellor Anneliese Dodds said more needed to be done to ensure CBILS loans were delivered to businesses at speed, but the new bounce back loans scheme would be strongly welcomed by the business community.
“While it’s a relief to hear from the Chancellor that there will now be a full guarantee for loans of up to £50,000, we need to know that normal commercial loan requirements will not continue to clog up the system,” she said.
Federation of Small Businesses chairman Mike Cherry welcomed the announcement of the new loan scheme.
“To date, the existing interruption loan scheme has not been working for the small firms that make-up 99 per cent of our business community,” he said.
“The decision by the chancellor to listen to our recommendation for a 100 per cent guarantee on smaller loans, alongside the creation of a new fast-track system for those applying for them, will give hope to thousands.”
At 4 Oceans Capital we hope that the application process is, indeed, simple and easily accessible for all small business owners, unlike it’s big brother CBILS which has been a complete waste of time for most of our clients. If you do want some advice or assistance visit our Bounce Back Loans enquiry page and we’ll get back to you asap.
Taken and amended from the original: Rishi Sunak launches bounce back loans for small businesses
Only been in business 6 weeks what do I do?
Hi Heather, we just responded yo your Facebook message, you should visit http://www.startuploans.co.uk as they are best placed to help.
Will directors still be credit searched? I’m guessing not as it’s 100% government backed. Thanks Marcus
Hi Marcus, not entirely clear on the application process yet but when we do know we’ll post an update.