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.
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.