Coronavirus: ‘Bounce Back’ Business Loan Announced…
Rishi Sunak, yesterday updated the range of loans available to businesses because of the impact of Covid-19. The newest type of loan has been named the ‘Bounce Back’ loan with it being described by The Chancellor as a “simple, quick, easy solution for those in need of smaller loans”.
Commentators have suggested that this new type of loan has been launched in response to criticisms that previous loans have both had poor uptake numbers and too low rates of approval.
We summarise the different loan funding available below. Information up to date as at 28 April 2020.
Coronavirus Bounce Back Loan
Eligibility: Aimed at ‘small businesses’ although no clarification as to what this means yet. It may be a much smaller definition than for the Businesses Interruption Loan Scheme. No forward looking criteria or complex eligibility tests.
Loan Amount: Minimum £2,000. Maximum £50,000, or 25% of business turnover if lower.
Loan Terms: Government guarantees 100% of the loan. No fees or interest to pay for the first 12 months. Loans may run for up to 6 years.
When: Launching on 4 May 2020, at 9am. Loan funds should be made available to the borrower within 24 hours of application approval.
Available through: A network of accredited lenders – likely including most banks. Will involve filling in a two-page self-certification form online.
Additionally: Businesses can’t have loans from both the Bounce Back Loan’s and the Business Interruption Loan Schemes. However, where a business has already obtained a loan via the latter there may be the option to transfer it into the Bounce Back Loan scheme.
Coronavirus Business Interruption Loan Scheme
Eligibility: Businesses with an annual turnover of up to £45 million
Loan Amount: up to £5m.
Loan Terms: Government guarantees 80% of the loan. Personal guarantees are not required for facilities below £250,000. Effectively interest and fee free during first 12 months as Government makes a payment to cover these costs during this period. Loans may run for up to 6 years.
When: Already live
Available through: British Business Bank in conjunction with various accredited lenders (banks etc.)
Coronavirus Future Fund
In short: launching in May 2020, the Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors. These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme. More information here
Coronavirus Large Business Interruption Loan Scheme
In short: available for businesses with turnover above £45 million. Loans available up to £25 million. More information here