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Starting last week, small businesses can apply for the new Bounce Back Loan of up to £50,000 to help them through the Coronavirus outbreak.

 Although open to a range of businesses, it’s a potential lifeline for the smallest (micro) enterprises needing a cash injection. From graphic designers and yoga teachers to high street florists and coffee shops, the Bounce Back Loan could provide a boost for many small businesses hit hard by the tough economic climate.

 The process has been designed to offer quick and easy access to financial help within days of applying. It’s been introduced by the Government as a simpler and quicker alternative to the existing Coronavirus Business Interruption Loan Scheme (CBILS) and gives businesses another option beyond the Self-Employment Income Support Scheme, which offers a grant of up to £7,500.

 Key features of the Bounce Back Loan:

  • Sole traders and smaller businesses can borrow between £2,000 - £50,000 (up to 25% of turnover) through a simple online application form.
  • The loan is available through a network of lenders, including the main banks.
  • The loans are 100% backed by the government, giving lenders the confidence to provide swift support.
  • The government will cover the cost of any fees and interest for the first year and businesses won’t have to start repaying the loan until after the first 12 months.
  • All lenders will charge a flat rate of 2.5% interest.
  • The loan is for six years but you can repay it early without incurring fees.
  • If you’ve already applied for up to £50,000 under the CBILS, you can apply to switch it to the terms under the Bounce Back Loan.

 Which loan to apply for

 The Government is moving quickly to try and speed up the support available to businesses, so more details are likely to emerge. But how do you know whether to apply for the Bounce Back Loan or the Coronavirus Business Interruption Loan Scheme (CBILS)?

 Under the CBIL scheme, businesses can access finance of up to £5 million with different interest rates  from lender to lender. But smaller businesses have found it difficult to get the support, and banks have come under fire for delays in processing the wave of applications.

 With the Bounce Back scheme, businesses can borrow between £2,000 - £50,000 at a low, flat interest rate of 2.5%. The application process has been simplified and businesses have been told to expect payment of the loan within a matter of days.

 On first impressions, it makes sense for small businesses needing up to £50,000 support quickly, to opt for the Bounce Back Loan. With a simpler process, faster turnaround and low interest rate, it’s a good option to help SMEs get through the crisis. For anything above this, businesses need to start the application for the CBIL scheme as soon as possible.

 No matter which loan you want to apply for, you need to have a good handle on your numbers. As we outlined in our previous blog about the CBILS, our Business Equation tool is a great way to test the impact of the pandemic on your business with different financial scenarios, so you’re fully prepared for your application.

 The problem is that nobody can predict how long it’s going to take for the situation to improve, let alone return to normal. So, care is needed in calculating the various options and we recommend using the tool on an ongoing basis to keep track of the changing financial environment.  

 We’re here to help SMEs through the process of applying for either loan, to make sure its suitable for your business and that you supply the right information to give you the best chance of being approved. We’ll also support you beyond the application process to make sure you have a longer-term view of the impact of the virus, with practical advice on how to get back on your feet and grow your business.

 For more details and a bespoke consultation, please contact us by emailing: This email address is being protected from spambots. You need JavaScript enabled to view it. or calling us on 0208 5912391.


Published in Our Blog