Latest News & Blog | Shorts Accountants

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

Written by Adam Ames | 26 October 2020

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'.  It was announced by the Chancellor on 2 November that the Bounce Back Loan Scheme has now been extended to 31 January 2021.

(Last updated 27.10.2020)

 

Bounce Back Loans - are for businesses looking to apply for between £2,000 - £50,000. There are no repayments for the first 12 months and whilst the repayment term can now be up to 10 years, the government have also announced that flexibility will be given to businesses who need it, and that if required, these loans can be repaid on a ‘pay as you grow’ basis.

 

(Content previously 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 Robinson, Scott Burkinshaw or Martin Dean). 

 

Other related news:
View full post