Yesterday morning [Monday 27 April] saw the Chancellor announce a Bounce Back Loans scheme for SMEs. This will enable such businesses to benefit from a new fast-track finance initiative that will provide loans with a 100% Government-backed guarantee for lenders.
HMRC’s official guidance can be found here, albeit with limited detail: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan.
The scheme will open for applications in less than one week on Monday 4 May and businesses will be able to access these loans through a network of accredited lenders.
Further detail is to be issued, but for the moment we understand that:
- Businesses will be able to borrow between £2,000 and £50,000 and access the cash within days
- Loans will be interest free for the first 12 months and businesses can apply online through a short and simple form
- Loan terms will be up to six years and no repayments will be due during the first 12 months
- The Government will work with lenders to agree a low rate of interest for the remaining period of the loan
You can apply for a loan if your business:
- Is based in the UK
- Has been negatively affected by the Coronavirus
- Was not “in difficulty” on 31 December 2019
Businesses that cannot apply for this funding include:
- Banks, insurers and reinsurers (but not insurance brokers)
- Public sector bodies
- Grant-funded further-education establishments
- State-funded primary and secondary schools
- Businesses that have already claimed under the Coronavirus Business Interruption Loan Scheme (CBILS), but it is possible to switch your CBILS to a Bounce Back Loan before 4 November 2020, with your lender’s assistance
The idea behind the Bounce Back Loans scheme is to bolster the existing package of support available to the smallest of businesses affected by the Coronavirus pandemic. The hope is that this will provide vital cash injections in a matter of days so that businesses can continue to operate.
The Government will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible.
As further details are released, we will continue to keep you updated.
For more information, please contact your Champion advisor.
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