So, you’ve come here for more information on the Bounce Back Loan. The name’s pretty cool to have come from a chancellor – so we give them that, and it’s not the only thing they deserve praise for.
The main thing to draw attention to is that it’s 100% backed by the government. It’s supposed to be accessed through an online portal rather than a formal, longwinded application process, and they say they’ll make a decision within a few days. All of this is excellent news, especially for the smaller businesses who are struggling.
What are the specifics of the Bounce Back Loan?
Here’s what you need to know.
- You can borrow between £2k and £50k, up to a maximum value of 25% of your turnover.
- The government will guarantee 100% of the loan to the Lender, so approval will be quick.
- The loan carries no fees, and no interest or repayments for the first 12 months.
- Loan terms will be up to 6 years and the Govt will work with Lenders to agree a low level of interest for the remainder of the loan. Given that interest rates are going to have to remain incredibly low for the foreseeable future to help drive the recovery of the economy this is not going to be a problem.
Eligibility
You can apply for a loan if your business:
- Is based in the UK
- Has been negatively affected by the Coronavirus
- Was not an “undertaking in difficulty” on 31st December 2019.
- Has not already claimed under the Coronavirus Business Interruption Loan Scheme.
The Bounce Back Loan Scheme will launch on May 4th and more information will be published shortly.
Should I claim the Bounce Back Loan?
You should strongly consider the Bounce Back Loan if…
- You have identified that you need to strategically realign your business as a result of the pandemic and you need funds to facilitate this restructuring:
- To cover the cost of redundancies
- New recruits
- New software or ways of working
- New product introductions/tooling
- Sales/business development investment
- Consolidating office/factory locations
- You still have a short to mid term working capital challenge and you would rather take on a Term Loan than any kind of invoice discounting or Factoring.
There are not many times when you will be given the chance to receive up to £50k in a government backed loan with no interest for 12 months, and nothing to pay for 12 months either – it’s almost like business loans from DFS!!
