Bounce Back Loans (100% Government Backed)

Bounce Back Loans (100% Government Backed)

New Government backed loan available now from your bank.

Useful to bridge a gap between grants or as additional cash flow to keep your business afloat.

In summary: These are low interest, medium term loans, with no personal guarantees. The application is quicker than a conventional loan too.

To apply you’ll need to approach your bank.

What could I use the loan for?

  • Bridging the gap between various government grants
  • Refinancing more expensive debt (existing loans not linked with Covid-19)
  • Covering wages (of employees still working, or whilst furlough grants are issued)
  • Investing in post lockdown marketing or business development
  • Putting aside as a safety net for the inevitable lag to business there’ll be once lockdown is eased

Obviously list list isn’t exhaustive

Further links:

  1. British Business Bank
  2. Government News Blog
  3. Government Details and Eligibility
  4. Starling bank bounce back loan application news (available 11th May 2020)

Further details:

  • From £2,000 to £50,000 available with a cap equivalent to 25% of your annual turnover (if lower than £50,000) – available to all eligible businesses, regardless of annual turnover.
    • Example. If your turnover is £100,000, then you can borrow up to £25,000. If your turnover is £300,000, then you can borrow up to £50,000  (the higher of £50,000 or 25% of your turnover).
  • Facilities: term loans
  • Repayment terms: six years, and early repayment permitted
  • Interest rate: 2.5% per annum. No interest is payable in the first 12 months.
  • Personal guarantees: No personal guarantees. No recovery action can be taken over the borrower’s main home or primary personal vehicle but, for sole traders or partnerships, other personal assets may be at risk of recovery action.
  • 100% guarantee: The scheme provides the lender with a government-backed guarantee (100%) against the outstanding facility balance (principal and interest).
  • The borrower always remains 100% liable for repayment of the debt.
  • The borrower must self-declare they meet the eligibility criteria and make certain confirmations.

You must confirm:

  • Your business has been impacted by the coronavirus (COVID-19) pandemic
  • You are trading under a UK limited company or partnership, or tax resident in the UK, that was carrying on business on 1 March 2020
  • Your business does not have a loan under the CBILS
  • More than 50% of your business income is derived from trading activity
  • The loan will not be used for personal purposes but as an economic benefit for the business
  • Whether or not on 31 December 2019, your business was a ‘business in difficulty’ (see definition in FAQs for Small Businesses: Bounce Back Loan Scheme) and does not breach state aid restrictions. If you were a ‘business in difficulty’ then, in addition, the facility will not be used for export-related activities
  • Your business is not in bankruptcy, debt restructuring proceedings or liquidation
  • is not in a restricted sector (see below)

Restricted sectors:

Bounce Back Loans are available to businesses in all sectors, except the following:

  • Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive)
  • Insurance companies
  • Public-sector organisations
  • State-funded primary and secondary schools

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