New 100% government backed loan scheme for small business
A new fast-track finance scheme will provide access to cash for businesses within days. Businesses will be able to borrow between £2,000 - £50,000 and pay no interest for the first 12 months.
The Chancellor has offered a 100% government back guarantee for lenders to ensure small businesses get the money they to need to keep operations going as soon as possible.
The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days. The loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days, providing immediate support to those that need it as easily as possible. The government, which has been consulting extensively with business representatives about the design of the new scheme, will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.
Loan terms will be up to 6 years and the government will work with lenders to agree a low rate of interest for the remaining period of the loan. The scheme will be delivered through a network of accredited lenders.
This new Bounce Back Loans scheme bolsters the existing package of support worth £15 billion made available to businesses affected by the coronavirus pandemic, including the £6 billion awarded in business grants, 4 million jobs supported through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.
How to apply
This scheme is not available yet. It will launch on 4 May 2020 and more information will be published soon on the government website here.
Eligibility
You can apply for a loan if your business:
- is based in the UK
- has been negatively affected by coronavirus
- was not an ‘undertaking in difficulty’ on 31 December 2019
You cannot apply if you are one of the following businesses:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).
If you’ve already received a loan of up to £50,000 under CBILS, and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.
