The Bounce Back Loans Scheme (BBLS) for smaller businesses which have been impacted by Covid-19, has opened for applications today.
Delivered by lenders accredited by the British Business Bank (BBB), the ‘bounce back’ loans are intended for small and micro businesses in all sectors.
The scheme provides loans from £2,000 up to 25 per cent of the business’ turnover with a maximum loan of £50,000, all with a 100 per cent government guarantee.
Chancellor Rishi Sunak (pictured) announced the 100 per cent state-backed BBLS on 28 April, following calls for the government to raise its guarantee from 80 per cent in the coronavirus business interruption loan scheme (CBILS), to quicken the delivery of funds to struggling businesses.
The BBB said providing lenders with this guarantee and standardising the application form is expected to lead to a faster process with many loans becoming available within days.
BBLS enables businesses to obtain a six-year term loan at a government-set interest rate of 2.5 per cent a year.
The government will cover interest payable in the first year, so borrowers will not have to begin principal repayments for the first 12 months
Businesses from all sectors can apply for a facility, but they must first self-certify they operate in the UK, have been adversely affected by Covid-19 and confirm they are not in bankruptcy, liquidation or undergoing debt restructuring.
And businesses can’t apply if they are currently using a government-backed coronavirus loan scheme, unless they plan on using BBLS to refinance a whole facility.
The scheme doesn’t allow for any personal guarantees.