Coronavirus Bounce Back Loan Scheme

Among the range of UK Government measures to help protect businesses and individuals from the economic impact of coronavirus, the latest to be announced is the Bounce Back Loan Scheme (BBLS). Launched on Monday 4 May 2020, smaller businesses impacted by coronavirus are now able to apply for funding support of up to £50,000 via the BBLS if certain eligibility criteria are met.

HOW CAN I GET HOLD OF THE MONEY?

The BBLS provides lenders with a government-backed guarantee of 100% to offer loans of up to £50,000 to businesses across the UK that are losing revenue as a result of the COVID-19 outbreak.

BBLS is administered by the British Business Bank and made available to businesses via accredited lenders. It is currently open until 4 November 2020.

KEY FEATURES OF THE SCHEME

  • Facilities to £50,000 or 25% of turnover, whichever lower, for eligible businesses.
  • Repayment terms: six years, with no penalty for early repayment.
  • Interest rate: 2.5% per annum. Interest is payable by the government for the first 12 months.
  • Personal guarantees: No personal guarantees. No recovery action can be taken over the borrower’s main home or primary personal vehicle but, for sole traders or partnerships, other personal assets may be at risk of recovery action.
  • 100% guarantee: The scheme provides the lender with a government-backed guarantee (100%) against the outstanding facility balance (principal and interest).
  • The borrower always remains 100% liable for repayment of the debt.
  • The borrower must self-declare they meet the eligibility criteria and make certain confirmations of solvency.

TO BE ELIGIBLE FOR THE BBLS

A business must confirm:

  • It is a UK limited company or partnership, or tax resident in the UK, that was carrying on business on 1 March 2020.
  • More than 50% of its income is derived from its trading activity.
  • The loan will not be used for personal purposes but as an economic benefit for the business.
  • Whether or not on 31 December 2019 it was a ‘business in difficulty’ (see definition in FAQs for Small Businesses: Bounce Back Loan Scheme) and does not breach state aid restrictions. If it was a ‘business in difficulty’ then, in addition, the facility will not be used for export-related activities.
  • It is not in bankruptcy, debt restructuring proceedings or liquidation.
  • Its understanding of losses that may be incurred, impact on credit rating, reduced consumer protection and that the lender will not assess affordability.

A business will be subject to standard checks such as customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.

Ineligible businesses and sectors: banks, building societies, insurance companies; the public sector including state-funded primary and secondary schools; or an individual other than a sole trader or partner acting on behalf of a partnership.

Businesses that have utilised the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Coronavirus Corporate Financing Facility (CCFF) cannot also use the BBLS unless that loan will be refinanced in full by the BBLS.

We are doing everything we can to help our business community. If you would like to discuss how the changes or the coronavirus pandemic may affect you or your business, please do not hesitate to contact us on 020 8952 7717 or use our online enquiry form.

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