The government’s new coronavirus Bounce Back Loan scheme will launch on 4 May. Here’s what you need to know.
What is the coronavirus Bounce Back Loan scheme?
Announced Tuesday evening, the Bounce Back Loan scheme is designed to help small and medium-sized businesses affected by Covid-19 to access quick, affordable loans between £2,000 and £50.000. The government will guarantee 100% of the loan and, as with the Coronavirus Business Interruption Loan Scheme, will cover fees and interest for the first 12 months.
Loan terms will be up to six years, with no repayments for the first year. The government is working with lenders to agree on a low rate of interest for the remaining loan period.
Chancellor Rishi Sunak said that businesses can expect to receive funding “within days” once the scheme opens on 4 May.
Who can apply for the government Bounce Back Loans?
You will be able to 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 your business is a:
- bank, insurer or reinsurer (insurance brokers are eligible)
- public-sector body
- state-funded primary or secondary school
You also cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme. If you’ve already received a loan of up to £50,000 under this scheme and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.
How to apply for a Bounce Back Loan
The Bounce Back Loan scheme will launch on 4 May 2020. We’ll update this post as more information becomes available.
What other forms of support are available for small businesses?
The government has rolled out a comprehensive package for businesses affected by the pandemic.
The Coronavirus Job Retention Scheme (better known as the government furlough scheme) covers 80% of PAYE employees’ monthly wage up to £2500. There’s also a self-employed equivalent, the Self Employment Income Support Scheme. Both are due to be paid in June, covering three months backdated to March.
Businesses that need to borrow more than £50,000 can use the Coronavirus Business Interruption Loan Scheme. This offers loans of up to £5 million or up to £250,000 without a personal guarantee. Terms are up to 6 years and the government will cover interest and fees for 12 months, just like this scheme.
If your startup relies on investment funding, the Future Fund will provide loans of up to £5 million, provided you can secure match funding from private investors. These loans are repayable and also include equity. This scheme is set to launch in May.