The Governments new Bounce Back Loan Scheme (BBLS) has launched this morning. The BBLS offers businesses a 100% government-backed lending facility if you meet the Bounce Back Loan Scheme eligibility criteria (which I’ll detail below).
The key features of the scheme are:
Loan Amounts: Loans of between £2,000 and £50,000 (up to a maximum of 25% annual turnover, whichever is lower). If your business was established after 1 January 2019, you should apply the 25% to your estimated annual turnover from the date you started your business.
100% Government Backed: Personal guarantee is not required
Loan Terms: BBLS Loans have a fixed term of 6 years. No repayments are required for the first 12 months
Loan Purpose: A BBLS Loan can be used for a wide range of purposes, such as working capital or investment, as long as it supports trading or commercial activity in the UK.
Eligibility: You can apply for a BBLS Loan if:
• You’re a UK-based business
• Your business has been impacted by Covid-19
• You were not an ‘undertaking in difficulty’ on 31 December 2019
• You haven’t already applied or received a BBLS Loan
• You don’t already have a CBILS, CLBILS or CCFF unless you’re refinancing it in full by taking this BBLS Loan
Quick and Easy Application Process: Small business owners can apply to accredited lenders by filling out a simple online form, with only seven questions.
Loan Interest Rates: The interest rate you pay is fixed and will remain so for the life of your loan.
If you apply for a BBLS Business Loan, you will be offered a Business Interruption Payment (BIP) by the UK Government. The BIP will cover payments of interest for a period of 12 months. Your loan documentation will state that interest is payable, but in practice the BIP will be paid directly by the UK Government to your lender for your benefit, and the lender will send a written statement to you setting out the total amount of the BIP which you have received.
There are no capital repayments for the first 12 months, after this time, your monthly repayments will include capital and interest payments.
Fees: There are no additional fees for a BBLS Business Loan.
Repaying the loan early: You can repay your loan at any time. There is no charge for repaying your loan early.
What is an undertaking in difficulty?
To be eligible for BBLS loan you must not be an ‘undertaking in difficulty’. For companies this is a business where the balance sheet total is less than half of the issued share capital.
To determine if this would apply to your business, you need to review your accounts and look at the balance sheet as at the 31st December 2019. You need to compare the total at the bottom, under the Capital and Reserves section. If the amount in the total box is below half of the Share Capital line, then unfortunately you will be excluded from the BBLS.
If your accounting year end isn’t the 31st December 2019, or if you don’t yet have your accounts for that year, under the scheme you can look at the previous year’s accounts.
Information you'll need for the loan application
• Business name
• Business address
• Company registration number (if a private limited company)
• Turnover for 2019 (estimates can be used)
• Bank account number and sort code
How to apply
The Bounce Back Loan Scheme (BBLS) is available to businesses through a number of accredited lenders across the UK.
The full rules of the scheme and guidance on how to apply is available on the British Business Bank website (https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans).
I hope this information is of assistance. If you would like to chat this through further please do not hesitate to contact me.
Steven Hillman ACA
Tel: 01934 444100