Announced the end of last week, and open for application from today, 4th May 2020.
The Bounce Back loans are a simplified form of loan, compared to the Coronavirus Business Interruption Loan Scheme (CBILS).
Per HM Government:
The Bounce Back Loan scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000.
The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.
Loan terms will be up to 6 years. No repayments will be due during the first 12 months. 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.
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
The major differences to the Coronavirus Business Interruption Loan Scheme (CBILS). would seem to be:
| Bounce Back | CBILS | |
| Maximum loan | The lower of £50k or 25% of turnover | £5m |
| Term | Up to six years, no early repayment fees | Between three and six years depending on type of finance |
| Payment Holiday | Up to 12 months | Discretionary |
| Government Guarantee | 100% | 80% |
| Fees and Interest charged to borrower | No fees / interest first year, then 2.5% interest | No fees or interest first year. Presumably commercial rates thereafter. |
| Security | No security to be taken, lenders prohibited from recovery over personal assets like home | Security may be required, but absence of security should not be a reason for turning loan down |
| Personal Guarantees (where borrower is a company) | No guarantees. | Personal Guarantees may be required on amounts over £250k, private home excluded and recoveries capped at 20% of the loan. |
| Application Process | Simplified process on a lender by lender basis | Requirements vary from lender to lender, but are likely to include:
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On the guarantee and security issue, its not as bright as it seems – the borrower is still responsible for 100% of the loan. Guarantees and security make the lenders recovery process easier.