Legal News | 29.04.20
Government Backed Bounce Back Loan Scheme
On Monday 27 April 2020 the Government announced a new loan scheme for small and medium businesses, launching 4 May 2020.
What is the Bounce Back Loan Scheme?
Businesses will be able to borrow between £2,000 and £50,000, with no interest payable by the business in the first 12 months. A business can apply for up to 25% of their turnover with a cap of £50,000. The loan term will be up to six years. Repayments will be due after the first 12 months. This Bounce Back Loan Scheme is intended to fast-track small and medium sized businesses access to cash within days. The Bounce Back Loan Scheme is 100% government-backed guarantee for lenders. The Government will be working with accredited lenders to deliver the Bounce Back Loan Scheme as quickly as possible with a low standardised level of interest on the remaining loan.
Who is eligible?
A business can apply for the loan if they are based in the United Kingdom, have been negatively affected by coronavirus and if they were not an ‘undertaking in difficulty’ on 31 December 2019.
A business cannot apply if they are already claiming funding under the Coronavirus Business Interruption Loan Scheme (CBILS). Businesses who have claimed under CBILS can transfer to the Bounce Back Loan Scheme providing they arrange this with their lender directly by 4 November 2020.
Certain businesses are not permitted to apply for the Bounce Back Loan Scheme including public-sector bodies, banks, insurers, state-funded primary and secondary schools and further-education establishments (if they are grant-funded).
How do businesses apply?
Applications are set to open on 4 May 2020. The intention is to have a short, standardised online application process, with the loan reaching businesses in days. Businesses will not be required to provide forward financials or business plans
This is a developing area, Wansbroughs Solicitors will continue to review and report to its clients any new developments in due course.