What is the Bounce Back Loan Scheme? 

Nigel Holland

The Bounce Back Loan Scheme is designed to help small and medium-sized businesses affected by the crisis, with the Treasury pledging to deliver the funds within days. 

The scheme is now live and Holland & Co are helping clients with the application process.

Companies will be able to borrow between £2,000 and £50,000 over a fixed six-year term. Borrowers are not required to make repayments or pay interest for the first 12 months. However, businesses can pay them back earlier without incurring early repayment fees. After 12 months, lenders will charge a flat rate of 2.5pc and will charge any fees. 

“The bounce back loan is extremely attractive. It has to be considered by Businesses hit by the effects of the virus.”

Quote from Nigel Holland.

Who can apply?

The scheme is available for companies of any size that meet the criteria. To qualify, a business must have been trading on March 1 this year and not have been in financial difficulty on Dec 31. Banks, building societies, insurance companies, public sector groups and state-funded primary or secondary schools are not eligible for the scheme.  

How can I apply?

Businesses should apply through the bank responsible for their business account. The scheme will also be available through a network of 50 accredited lenders, including Barclays, HSBC, Lloyds Bank, Natwest, RBS and Santander. 

Borrowers will be required to fill in a short online form to collect details of the business, including information about turnover, taxes and how the lockdown has affected their company. Applicants will undergo standard customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.

There is no fee to access the scheme and it will be available until Nov 4. However, the government could extend the scheme if required. 

What if I’ve already applied for a loan under the CBIL scheme?

A business cannot take out a Bounce Back Loan if they have been approved for funding under the CBIL scheme.

Businesses currently applying for a CBIL scheme can switch their applications to the Bounce Back Loan Scheme.

All accredited lenders who have approved CBILS loans so far will allow customers to refinance their loan into the Bounce Back Loan Scheme where appropriate. Applicants are not required to stay with existing lenders.

What are the key differences between the Bounce Back Loan Scheme and the CBIL scheme?

Funding under the Bounce Back Loan Scheme is capped at £50,000, whereas the CBILS facility offers up to £5m. The government will guarantee 100pc of the loans, unlike CBILS, which come with a guarantee of 80pc of the money. 

The interest set on the Bounce Back Loan Scheme is fixed at 2.5pc while interest and fees on the CIBIL scheme are decided by the lender and may vary.