Bounce Back Loan Scheme

BBL Loan – The Bounce Back Loan Scheme ended on March 31 2021. If you are looking to borrow money, please be aware that this scheme no longer exists. Instead, you can apply for a Recovery Loan. For more information, please see our guidance on the new scheme.

Banks and other finance providers know that the cashflow of small and medium sized businesses may be disrupted by the impact of Covid-19.

Uh-oh. Businesses are having a rough time right now. How can you help them? Banks are still there to help businesses continue to thrive. They remain open and willing to assist all businesses, including sole traders and SMEs, who need help in tough times.

The government is offering some help to help small businesses. The Bounce Back Loan (BBL) scheme offers a variety of assistance to small businesses including capital repayment holidays, overdrafts, working capital extensions, and asset-based financing.

The Business Banking Liaison (BBL) scheme is a new government program that offers business banking assistance. The program includes three different loan types: Coronavirus Business Interruption Loans, Coronavirus Large Business Interruption Loans and the Covid Corporate Financing Facility.

Small and medium-sized businesses were affected by the new tax law. But the industry and the British Business Bank are here to help. The trade association and the bank will work tirelessly to bring support to SMEs that were trading successfully before the new tax law but now suffer from lost or deferred revenues, or disruptions to their cashflow.

Key Features

  • Loans of between £2,000 to £50,000 (up to a maximum of 25 per cent annual turnover)
  • No repayments required for the first 12 months
  • The government covers the first 12 months of interest (this means you pay 0 per cent for the first year)
  • 6-year loans with no early repayment charges
  • Interest rate of 2.5 per cent
  • The government provides a 100 per cent guarantee to the lender

How do I access the Bounce Back Loan Scheme?

The BLAS program closed for new applications on March 31st.

How do I apply to ‘top-up’ my existing Bounce Back Loan?

A new era has come. Applications for BBLS will close on March 31 2021. New applications will not be accepted after that date.

Is my business eligible for a Bounce Back Loan?

To be eligible for the BBL scheme, a business must be:

  • Based in the UK and was carrying on its business on 1 March 2020.
  • Able to confirm that it has been adversely impacted by the coronavirus (Covid-19).
  • Applying to borrow between £2,000 and £50,000 capped at 25% of annual turnover.
  • Able to declare that the business was not insolvent or otherwise a business in difficulty on 31 December 2019. Businesses unable to make this declaration will be asked to complete a form to assess their eligibility under State Aid rules.

The following businesses are not eligible to apply:

  • banks, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • further-education establishments, if they are grant-funded
  • state-funded primary and secondary schools.

If you’re thinking of applying for a new business loan, you cannot do so if you already have a Coronavirus Business Interruption Loan (CBIL) scheme loan.

I have an existing loan for my business. Can I transfer it to a new loan?

In the near future, this will happen: any customer with a loan of £50,000 or less will be able to switch that loan from a CBIL scheme to a BBL scheme.

What information will I have to provide to apply?

To apply for the scheme, you need to fill out a short application with basic information.  Then, based on a series of questions and statements, the government determines whether you are eligible for the program.  The application form asks you to declare your business name, address, contact information, bank account details, and business turnover.

If you’re not the owner of the business, you might need to provide some additional information in order to prove that you are a business owner.

New customers who have no existing financial relationship with a lender may need to open a new bank account.

To be eligible for a business current account, you must have proof of your company registration, proof of your personal identity, and proof of your address.

How do I evidence my viability?

It’s important to be honest and understand your repayment obligations before you apply for a payday loan. Businesses self-certify that they understand the costs associated with the loan and that they intend to repay it on time.

Will I have to pay interest on my loan?

If you’re a business owner, the government may help out. If your business is affected by severe weather or other emergency situations, you can apply for a Business Interruption Payment to cover the first year of interest payments and lender-levied charges on your behalf.

After twelve months, you will be required to pay 2.5 per cent interest.

Can I repay my loan early?

Here’s a small tip. If you take advantage of the BBL product, you will not be charged a penalty fee for repaying your financing early.

After the first year of no interest, you will be responsible for paying the facility back, as well as interest and fees.

What if I am struggling to repay my BBLs loan and require additional flexibility?

The Chancellor is doing something to help you, BBLs borrowers.

Borrowers now have the option to:

  • Extend the length of the loan term from six years to ten
  • Make interest-only payments for six months, with the option to use this up to three times throughout the life of the loan
  • Once six payments have been made, request a six-month repayment holiday.

What products can I use through the scheme?

Only loans with a fixed term of six years are available. There are no early repayment charges.

Does it cover all sectors?

The program covers most business sectors, but not all of them.

If you’re a business that operates in the fisheries or aquaculture, agriculture, or logistics industries and has been deemed an Undertaking in Difficulty, then special restrictions apply.

For a business involved in fishing or fish farming, Bounce Back Loans are not available for the following activities:

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Will the amount of money available for Bounce Back Loans run out?

The government has made it clear that there is no set maximum cap on how much money they will lend to businesses through the BBL scheme. That means you can take your time and see if you need any loans in the future.

Is the BBL scheme a loan or a grant?

The government’s scheme is not a grant. The scheme provides a guarantee to a lender so they can give out loans, but the borrower still has to pay the loan back.

The government is helping businesses. For example, if you are in the food industry, the government has grants that you can apply for. If you are in the medical industry, the government has grants for you too! Further information regarding these initiatives is available on the government’s website.

Will I have to provide a personal guarantee or security to take out a Bounce Back Loan?

No.

Can I use a BBL to refinance existing borrowing?

Is it possible to have both refinancing and new money in your current structure

I was declined a CBIL scheme loan, is there any point applying for a BBL?

I am so sorry, but you have been declined a CBIL facility. Luckily, it may be possible for you to get a BBL. Please apply for one.

However, don’t forget to consider the BBL scheme’s eligibility criteria. It’s different from CBILS and you should factor that into your decision to apply.

I have applied for a CBIL loan under £50,000 but I am waiting for a response, what should I do?

You may withdraw your application for a loan and apply for a business bank loan instead. From May 2020, it will not be possible to get a loan of under £50,000 from a bank or overdraft.

Will the interest rate vary by bank? Who has set the interest rate?

The interest rate of the BBL loan is set by the government and offered to borrowers by all accredited lenders. This rate is not controlled or set by the lender. The interest rate payable after 12 months is 2.5%.

How long must I have been trading for?

Your business must be established by March 1st, 2020. You don’t have to have a history that is as long as the competition.

Is turnover net or gross of VAT?

Employee turnover is reported in tax returns or financial accounts.

Will taking out a BBL loan impact my credit rating?

When you miss a payment, the lender may report this to credit agencies, and your credit rating may be affected.

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