So, this morning the latest measure of the government’s support for business during Covid-19 has gone live, being the Bounce Back Loan Scheme.
These are smaller than the Coronavirus Business Interruption Loans (CBILs) currently on offer and crucially, come with no personal exposure for the business owner, with the government backing the loan 100%. The loans are a maximum of 25% of turnover and vary between £2,000 and £50,000.
The interest rate will be capped at 2.5% per year, with no interest payable or repayments required in year one, with a maximum six year term, which can be repaid sooner if required.
You can apply for a loan if your business:
- is based in the UK
- has been negatively affected by coronavirus
- was not an ‘undertaking in difficulty’ on 31 December 2019
- derives 50% or more of its income from trading (precluding investment companies)
Applicable lenders can be found here.
There is a commitment that the cash will be available within one working day of the loan being approved, which can only be applauded. However, as it is day one, we have seen no data on how long the loans are taking to gain approval.
Again, preference is given to use your existing bank as a lot of the applications are dealt with via the banks online banking systems. We have not yet had any visibility of how an ‘Undertaking in Difficulty’ is being looked at, and would welcome some guidance on that, in order to give clarity on who can apply.
The process does seem to be simple as was promised, so it will be great to see how quickly people can get approved and also the approval rate, bearing in mind the press around the bigger brother CBIL.
If you would like to discuss your position with regards to funding at this time, please do get in touch.