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The New Government Bounce Back Loan

29th April 2020

Over the last couple of months the Government has taken massive action to help businesses during the Coronavirus restrictions. Much of it has worked well – though it took a bit of time for the announcements to turn into actual help – but there is one area that didn’t go entirely to plan.

The Coronavirus Business Interruption Loan Scheme (CBILS), delivered by the British Business Bank, was launched on 23 March 2020 to support small and medium-sized businesses to access bank lending. The Government guaranteed up to 80% of each loan in order to give lenders confidence and therefore lend money to SMEs who had been impacted by COVID-19. It supports loans of up to £5 million in value,  interest free for the first 12 months.

Unfortunately, many lenders didn’t enter into the spirit of the thing and, as SMEs applied to their own business bank for a loan to tide them over, they found they were being asked to provide personal guarantees, security on their personal assets (potentially putting their home at risk) and were being charged interest.

In essence, if they’d been able to get a loan before Coronavirus hit, they could still get one. If not… not.

A new alternative.

This week the Government announced the Bounce Back Loan Scheme to help those who haven’t been able to get funding via CBILS.

From 4th May Small business can apply for up to 25% of their turnover (anything from £2000, up to a maximum of £50,000). There will be nothing to pay and no interest charged for the first 12 months and they will be 100% Government backed. Plus, there is no forward test on viability (although if you were already in difficulty on 31 December 2019 you aren’t eligible) so any business who needs one ought to be able to apply.

The application is being promised as a ‘quick standard form’ and that payment will be made within 24 hours of approval.

If you want to find out more about this, take a look at the page on the Government Website: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan.

If you want our help to see how one of these loans may help you and to see what impact it would have on your business numbers, contact us to see how we can help.

 

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