Covid-19 Financial Support
Posted on 26th May 2020 at 11:16
1. Bounce Back Loan Scheme (BBLS)
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.
• Arrangement fees and the first 12 months interest will be paid by the government.
• After 12 months the interest rate will be 2.5% a year.
• Lenders are not permitted to charge any fees.
• The borrower is 100% liable for repaying the loan and any interest.
• The length of the loan is 6 years, but you can repay early without paying a fee.
• You can find a list with participating lenders in the scheme here.
• If one lender turns you down, you can apply to other lenders in the scheme.
• The Scheme will initially open until 4 November 2020 (and it has now been extended until 31 March 2021).
• Lenders are not permitted to require personal guarantees for the Bounce Back Loan Scheme.
Is your business eligible?
You can apply for a loan if your business:
• is based in the UK and was established before 1 March 2020
• has been adversely impacted by the coronavirus
• is not already claiming under CBILS (Coronavirus Business Interruption Loan Scheme)
What can I use the loan for?
Borrowers are required to declare that they will use the loan only to provide economic benefit to the business, and not for personal purposes.
What happens if I my business cannot repay the loan?
• No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle.
• Lenders will follow standard commercial recovery procedures before making a claim against the government's guarantee.
2. Coronavirus Business Interruption Loan Scheme (CBILS)
The scheme helps small and medium-sized businesses to access loans and other kinds of finance up to £5 million.
• The government guarantees 80% of the finance to the lender.
• Following the launch of the Bounce Back Loan Scheme the minimum for a term loan will be £50,001.
• Repayment terms are limited to 6 years.
• You will need to provide documents that show you can afford to repay the loan – management accounts, cash flow forecast, business plan, historic accounts and details of assets.
• You can find accredited lenders here.
• Interest and fees are set by accredited lenders and will vary by lender.
• The government will cover first 12 months of interest and fees payable.
• Businesses remain 100% liable to repay the full loan amount, as well as interest, after the first year.
• No personal guarantees for any facilities below £250,000.
• If you are struggling to repay the loan, lenders will follow standard commercial recovery procedures before making a claim against the government's guarantee.
3. Start Up Loans
The Start Up Loans Scheme is available to businesses who have been trading for less than 2 years including newer businesses who began trading after 1 March 2020.
• Government-backed finance of between £500 and £25,000 per owner (limited to £100,000 per business)
• Fixed 6% interest per annum. No application fee and early repayment fee.
• You can repay the loan over a period of 1 to 5 years.
• You can apply for both Start Up Loan and Bounce Bank Loan.
• A loan under the scheme is still classed as a business loan but provided as an unsecured personal loan to the business owner.
• You’ll get free support and guidance to help write your business plan.
• Successful applicants get up to 12 months of free mentoring.
• The Start Up Loans Company a subsidiary of the British Business Bank delivers the loans.
Please do get in touch with your usual Chart Accountancy contact if you have any questions.
Keep safe and well.
Tagged as: Covid-19 Financial Support
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