From today companies are able to apply for a Bounce Back Loan of up to £50,000, interest and repayment free for the first 12 months, 100% guaranteed by the government and at a very competitive 2.5% interest rate per annum fixed for the term of the loan.

The loans will be repaid over a term of 6 years and are designed to deliver a quick cash injection to smaller businesses. Applications can be made using your normal internet banking at the participating banks. There are no viability tests or other onerous eligibility criteria, that have adversely affected the widely criticised CBILS scheme, however, the Bounce Back loans will still be paid through the main high street banks already struggling with a severe backlog of loan applications.

Currently the loans are only available from Barclays, Bank of Scotland, Clydesdale & Yorkshire Bank, HSBC, Lloyds, Natwest, RBS and Santander. If you don’t have an exisiting business bank account with one of the accredited lenders under the scheme then you will not be able to access this funding currently.

The British Business Bank have said that they are trying to get other alternative lenders and some of the challenger banks accredited, but currently none are. Although Funding Circle is accredited for CBILS lending it isn’t currently offering Bounce Back Loans and due to the low cost nature of these loans it may not want to.

So far all reports show that the application process is very straightforward with just a few company details required as well as a number of declarations from the business owner.

Companies in receipt of the Retail and Hospitality Grant are eligible for both sources of funding.  Businesses with existing loans can still apply but evidence of their other outgoings might be asked for along with proof that all debt repayments can be met.

The only hard exception is if you’re already in receipt of funds under the Coronavirus Business Interruption Loan Scheme (CBILS). Although if you have received a loan for £50,000 or less under CBILS then you can transfer it to the Bounce Back Loan Scheme by arranging it with your lender, you would need to do this before November 4th 2020 however.

The loans will be available regardless of company structure so sole traders and partnerships should feel free to apply. Even companies that haven’t been in existence long can apply, especially if they are confident their recent financial records are strong.

The only prescribed organisations that are ineligible to apply are banks; insurers; re-insurers (but not insurance brokers); public sector bodies; state-funded primary and secondary schools.

One change that the government has made to their COVID-19 lending support packages is by changing the viability tests so that all banks will need to assess whether a business was viable prior to the coronavirus lockdown.

Any Business that was “undertaking in difficulty) – insolvent – as at 31 December 2019 won’t be considered eligible. 

To find out how much a bounce back loan will cost please use the simple calculator on the left.

Contact your bank or accountant for assistance with the Bounce Back loan, but if you feel you need further advice on potential restructuring, then get in touch with us today or use the form shown to make an enquiry.

We’ll arrange a free initial consultation to get an understanding of where your business is right now and what support you’ll need in the coming weeks and months ahead.