Bounce back loan ‘top-ups’ now available

Lenders offering bounce back loans (BBL) are now able to offer borrowers a ‘top-up’ if they originally took out less than the maximum amount.

The emergency scheme was unveiled in May to support smaller businesses during the pandemic, offering loans of up to £50,000, with the value of the loan fully guaranteed by the government.

The British Business Bank said the BBL top-up will be available from several large lenders from today (Tuesday 10 November), with other lenders expected to make the top-up available in due course.

Peer-to-peer lending platform Funding Circle is among those accredited to deliver the scheme.

Top-ups are only available from a borrower’s existing BBL scheme lender. A borrower can apply for a top-up that is for the lesser of £50,000 or 25 per cent of their annual turnover, minus the value of their original loan.

For example, if a borrower had certified an annual turnover of £100,000 in their original application and taken a BBL of £20,000, equating to 20 per cent of their turnover, they can ask to borrower an additional £5,000, taking their BBL to the maximum 25 per cent of their turnover.

A BBL borrower is only allowed one top-up, with a minimum top-up amount of £1,000.

As of 18 October, more than £40.2bn has been lent to small businesses through BBLS, according to figures from the Treasury.

However, the scheme has attracted criticism from politicians and the British Business Bank itself, due to the risk of fraud and predictions of high defaults.

Last month, the National Audit Office warned there is a “very high level” of fraud risk among BBL scheme borrowers which could result in government losses of between £15bn and £26bn.

The scheme has been extended from the end of November to 31 January next year.