UK chancellor announced bounce back loan scheme to help small businesses that have been affected by Corona Virus Pandemic to borrow loan from £25,000 to £50,000 with 100% government guaranteed and with no interests, repayment or fees payable for first 12 months. This means that government will cover first 12 months interests or business interruption payment and borrower does not have to make any repayment for the first 12 months.
Mike Cherry, Chair of the Federation of Small Businesses, stated that the coronavirus business interruption loan scheme (CBILS) “has not worked for the small firms that make up 99 per cent of our business community. The new bounce back facility offers real hope in this space.”
The aim of this new micro loan scheme or business loan is to provide simple, quick, and easy solution in the form of loan to those in need of small loans to keep their small businesses a float. After 12 months businesses will be liable to pay interest 2.5 % per annum (fixed interest rate set by government) and repay full amount of loan with loan terms up to six years without early payment charges. As stated by UK Chancellor in letter,
“As a 100% guaranteed loan scheme, the price of bounce back loan scheme is critical to its success: together, we need to ensure that these loans are affordable and accessible. As such, and incorporating a range of data, I have come to the decision that the rate should be set at 2.5%,”
Lenders are not allowed to take any personal guaranteed or recovery action over the borrower personal assets such as their main home and their personal vehicle to give loan to borrower.
Eligibility criteria for bounce back loan scheme:
Bounce back loan scheme is open for businesses that:
- Have based in UK
- Have been negatively affected by coronavirus Pandemic
- Have not been in difficulty by 31st December 2019
- Derives more than 50% of its income from its trading activity (charities and educational colleges are exempt from this requirement).
- Have been established on or before 1 March 2020 and is engaged in trading or commercial activity in UK at the date of application
- Have not already received loans through Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, or the Covid-19 Corporate Financing Facility.
- Businesses is not in bankruptcy, debt restructuring proceedings, liquidation or similar while submitting this bounce back loan scheme.
- They will use the loan for economic benefit of business and not for personal use or for export activity. They have understood the costs associated with repayment of loan and able to complete timely repayment in future.
- Restricted trades and organizations are not eligible to apply for bounce back loan scheme including Banks, building societies, insurers and reinsurers (but not insurance brokers); public-sector bodies; and state-funded primary and secondary schools.
What do I need to apply for bounce back loan scheme?
The businesses who meet the above criteria or have self-declare that they are eligible for bounce back loan scheme can sign up online to one of British bank accredited lenders ’websites and fill in the short online application form for this scheme that is open from 4th May 2020 until 4th November 2020 and expected to extend its date by government if necessary.
Businesses can apply through their accredited lenders if they already have one or can apply through British bank accredited lender’s including
- Bank of Scotland
Royal Bank of Scotland
To apply online and to self-certify that they are eligible for this bounce back loan scheme businesses need the following information:
- Company name, address and company registration number (where applicable)
- Turnover for 2019 (estimates can be used)
- Business current account and sort code
- If you are using personal bank account for business purpose, your business will have to provide a copy of 2018/19 self-assessment tax return.
As this bounce back loan scheme has designed to provide businesses to quick access to finance, so, businesses will get their loan within 24 hours after completing their online application forms and assessing by their accredited lenders.
How Accountants in Reading at Berkshire accountants limited can help you get your loan by bounce back loan scheme?
If you are small or medium sized business and do not already have accredited lender for your business and need any help to apply for bounce back loan scheme, you can contact our Berkshire accountants at Berkshire accountants limited. We will help you how can apply for this bounce back loan scheme through British bank accredited lenders.