100% guarantee up to £50,000 - Bounce Back Loan Scheme

27 April 2020 Martin Dean Corporate Finance, Covid-19

Some of the UKs smaller businesses could benefit from an amendment to the current arrangements, enabling them to 100% guarantees on loans of up to £50,000 under the new 'Bounce Back Loan Scheme'.

(Last updated 01.05.20)

The Chancellor announced back in March, that UK-based small and medium sized businesses could apply for interest-free loans under the Coronavirus Business Interruption Loan Scheme (CBILS) to help them through difficulties encountered as a result of the COVID-19 situation.  Some businesses however, are finding it difficult to obtain credit, leading to the latest suggestions.

This is undoubtedly good news for the UKs smaller businesses, offering a lifeline, in particular, to many of the retail and hospitality businesses that have been forced to close their doors under the lockdown restrictions.

Our understanding is:

  • The scheme is expected to go live at 9AM Monday 4th May; the application process will be completely digital, with the customer competing a two page application online. The scheme will be available via the approved banks/financial institutions rather than directly from the government.
  • The scope of lending of £2,000 – £50,000 of borrowing, termed over a maximum of 6 years, with the first year interest and capital repayment free.  Businesses can make lump sum reductions without fee/penalty. The government provides a guarantee for 100% of the debt, whereas CBILS loans are 80% guaranteed.
  • To qualify for the scheme the customer needs to be retaining profits on the most recent finalised financial accounts. The turnover needs to be less than £45M to qualify for the scheme. The loan amount is capped at £50K or 25% of turnover, whichever is lower.
  • More details are available on the government website.

Please do get in touch with your normal Shorts contact to talk things through, or one of our Covid-19 support coordinators (David RobinsonScott Burkinshaw or Martin Dean). 

Please be assured that we are ready to help.

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