The Bounce Back Loan Scheme (BBLS) enables smaller businesses to access finance more quickly during the coronavirus outbreak.
The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
The scheme is open to applications until 31 March 2021.
If you already have a Bounce Back Loan but borrowed less than you were entitled to, you can top up your existing loan to your maximum amount. You must request the top-up by 31 March 2021.
Eligibility: Bounce Back Loan Support
You can apply for a loan if your business:
- is based in the UK
- was established before 1 March 2020
- has been adversely impacted by the coronavirus
Who cannot apply
Businesses from any sector can apply, except:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
If you’re already claiming funding
You cannot apply if you’re already claiming under:
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Coronavirus Large Business Interruption Loan Scheme (CLBILS)
- COVID-19 Corporate Financing Facility
If you’ve already received a loan of up to £50,000 under one of these schemes you can transfer it into the Bounce Back Loan scheme. You have until 31 March 2021 to arrange this with your lender.
How long the loan is for
The length of the loan is 6 years, but you can repay early without paying a fee. No repayments will be due during the first 12 months.
Before your first repayment is due, your lender will contact you about further options to:
- extend the term of your loan to 10 years
- move to interest-only repayments for a period of 6 months (you can use this option up to 3 times)
- pause your repayments for a period of 6 months (you can use this option once)
How to apply: Bounce Back Loan Support
There are 29 lenders participating in the scheme including many of the main retail banks. You should approach a suitable lender yourself via the lender’s website.
The lender will ask you to fill in a short online application form and self-declare that you are eligible.
The lender will decide whether to offer you a loan or another type of finance and you’ll be responsible for repaying 100% of the amount borrowed.
If the lender turns you down
If one lender turns you down, you can apply to other lenders in the scheme.
You may want to consider using a broker to find the right type of finance for your needs, or do your own research using the British Business Bank’s finance guide.
Bounce back loan borrowers can delay repayments by extra six months
Businesses that took out government-backed Bounce Back Loans to get through Covid-19 will now have greater flexibility to repay their loans, the government announced today (8 February).
Bounce Back Loan borrowers will now have the option to tailor payments according to their individual circumstances
Chancellor makes support even more generous with the option to delay all repayments for a further six months
Pay as You Grow will be available to over 1.4 million businesses, which collectively took out nearly £45 billion through the Bounce Back Loan Scheme
The Chancellor’s Pay as You Grow repayment flexibilities now include the option to delay all repayments for a further six months, meaning businesses can choose to make no payments on their loans until 18 months after they originally took them out. The option to pause repayments will now be available to all from their first repayment, rather than after six repayments have been made.
Pay as You Grow will also enable borrowers to extend the length of their loans from six to ten years (reducing monthly repayments by almost half) and make interest-only payments for six months, in order to tailor their repayment schedule to suit their individual circumstances.
These Pay as You Grow options will be available to more than 1.4 million businesses which took out a total of nearly £45 billion through the Bounce Back Loan Scheme.
This is in addition to the government covering the costs of interest for the first year of the loan.
Pay as You Grow’s additional support, first announced by the Chancellor in September, will give borrowers the option to tailor repayments to their individual circumstances.
This will provide more time and greater flexibility to repay the loans.
From today, lenders will begin reaching out to borrowers to provide information on repayment schedules and how to access flexible repayment options.
The Chancellor of the Exchequer, Rishi Sunak, said:
Businesses are continuing to feel the impact of extended disruption from Covid-19, and we’re determined to give them the backing and confidence they need to get through the pandemic.
That’s why we’re giving Bounce Back Loan borrowers breathing space to get back on their feet, through greater flexibility and time to repay their loans on their terms.
Lenders will proactively and directly inform their customers of Pay as You Grow, and borrowers should only expect correspondence three months before their first repayments are due.
It will provide businesses with the following options:
- Extend the length of the loan from six years to ten
- Make interest-only payments for six months, with the option to use this up to three times throughout the loan
- Pause repayments entirely for up to six months
Business Secretary, Kwasi Kwarteng, added:
The comprehensive and generous financial support package we have delivered across the UK has protected jobs, saved businesses and kept local economies on the move.
While our vaccine rollout is moving at an incredible pace and the end is in sight, we know times are still tough for many companies and extra support is needed.
These flexible repayment options will give businesses the time they need to recover from the pandemic before paying back loans, giving them the breathing space and confidence to build back better.
The British Business Bank run the Bounce Back Loan Scheme.
The government has made clear that lenders are expected to offer PAYG options to all borrowers under the Bounce Back Loan Scheme.
Following discussions with lenders, all borrowers should receive identical information on PAYG being offered.
The Financial Conduct Authority’s conduct rules require lenders to show due consideration and appropriate forbearance to borrowers in difficulty.
Under the Bounce Back Loan Scheme, no repayments or interest are due from the borrower during the first 12 months of the loan term.
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