Small businesses hit by the impact of coronavirus measures can apply for a new ‘Bounce Back’ loan scheme and apply for up to £50,000, backed by a 100% Government guarantee.
Businesses can apply for a minimum of £2,000 up to a maximum of £50,000, or 25% of business turnover, and the Government will pay the interest for the first 12 months, with 100% backing. No repayments will be due in this period to enable firms to get back on their feet.
The government has also agreed with lenders that an affordable flat rate of 2.5% interest will be charged on these loans. And any business that has already taken out a Coronavirus Business Interruption Loan of £50,000 or less can apply to have these switched over to this generous new scheme.
The scheme is now open, with an online form to complete, and most loans will be paid within 24 hours of approval. There will be no forward-looking eligibility test, the Chancellor also confirmed, while businesses will be able to access the loans through the existing network of accredited lenders. Click here for a link to the application page.
Government lender guarantee
Chancellor Rishi Sunak revealed the scheme following concerns that access to existing coronavirus rescue schemes was taking too long.
Previous loans, such as the Coronavirus Business Interruption Loan Scheme, were offered with only an 80% Government guarantee; that still exposes banks to 20% of the risk and has led to complaints that banks are not lending. Sunak, however, has changed course on this one, describing them as ‘bounce back’ loans.
Sunak said the new scheme would help “bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.”