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arrow_back How can I apply for a Bounce-Back Loan?

in Banking and financing Accounting Expert
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The UK government has now launched the Bounce-Back loans for small businesses struggling due to the COVID-19 pandemic. This is meant to be simpler than the CBIL scheme and easier for businesses to apply.

Which businesses are eligible, which banks provide the loan, and how can I apply? What are the terms of the loan? Also, how long does it typically take from application to money in the bank?

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The Bounce Back Loan Scheme (BBLS) enables smaller businesses to access finance more quickly during the coronavirus outbreak. This scheme is put in place to aid small and medium-sized businesses to borrow between £2,000 and up to 25% of their 2019 turnover, with a maximum loan of £50,000.

 Terms & Details:

  • government guarantees 100% 
  • no fees or interest for the first 12 months 
  • 2.5% yearly interest rate after 12 months 
  • the loan term is six years, but the loan can be paid back sooner with no early repayment charge 
  • the scheme will initially open until 4 November 2020 
  • no set up or application fees

 Eligibility:

The business applying for the loan must be

  • UK based 
  • established before March 2020 
  • adversely impacted by the coronavirus 
  • not in bankruptcy, liquidation or undergoing debt restructuring

 Ineligible businesses:

The following businesses are not eligible to apply

  • banks, insurers and reinsurers (but not insurance brokers) 
  • public-sector bodies 
  • state-funded primary and secondary schools

 Banks that provide the loan:

There are 11 lenders participating in the scheme which should be approached via their website. The lenders are the following:

Allied Irish Banks / Bank of Scotland / Barclays / Clydesdale and Yorkshire Banks / Danske Bank / HSBC UK / Lloyds Bank / NatWest / Santander UK / Starling / The Co-operative Bank / RBS / TSB / Ulster Bank

Application process:

  • approach the lender via their website 
  • fill an online application form (you will need: company name, address, company registration number, 2019 turnover or estimates) 
  • self-declare eligibility 
  • the lender will decide whether to offer a loan 
  • if one lender turns you down you can still approach other lenders in the scheme

 How long does it typically take:

The application form is short and quick. The assessment by the lenders is expected to be assessed within a matter of days. In some instances, the lender may ask you for additional information, such as an HMRC self-assessment tax return.

 Points to note:

  • The business must confirm to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, and not for personal purposes. 
  • Lenders are not permitted to require personal guarantees for the Bounce Back Loan Scheme. 
  • A business is not able to take out a Bounce Back Loan Scheme facility if they have been approved for a CBILS facility, and vice versa. 
  • Be prepared for possible wait times as there is significant interest in the Bounce Back Loan Scheme
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