Supporting Business Growth
This week Chancellor Rishi Sunak has launched Bounce Back Loans to provide fast-tracked funding to small businesses. This is a much needed “bridge” to plug the gap between the Coronavirus Business Interruption Loan Scheme [CBILS] and small business, as CBILS has been an administrative heavy procedure and the banks (despite their efforts) have been slow to process applications.
The terms of the new Bounce Back loans are very attractive
What do you need to know…
- Businesses will be able to borrow an amount equal to 25% of their turnover, up to a max of £50,000
- The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months
- Loan terms will be up to 6 years – no repayments will be due during the first 12 months
- The rates of interest for the remaining term of the loan will be 2.5%
- Successful applicants should expect to see the funds in their bank accounts within 24 hours
The Bounce Back Loans facility will be available from 9am on Monday 4 May.
Tip [1]
We have had enquiries from some businesses already who are considering taking the loan as a cash safety net for the next 12 months with a view to repaying the entire sum before loan costs are incurred.
Tip [2]
Interested business owners should check they have online access to their business bank account.
Eligibility criteria…
- Business is based in the UK
- Business has been negatively affected by coronavirus
- Business was not an ‘undertaking in difficulty’ as at 31 December 2019
‘Undertaking in difficulty’, hasn’t been clarified yet, but it is likely HMRC will apply the definition referenced by EU state aid regulations, along the lines of…
As at the 31 December 2019…
- …the business was unable to pay its debts as they fall due
- …the Balance Sheet reports negative equity
Next steps…
We are waiting for further clarification on the application process (as well as the difficulty definition above). We expect to receive further details any day now.
As ever, Adams O’Rourke are here if you need any further assistance regarding Covid-19 business support.
Take care everyone!