Bounce Back Loan Scheme

Government Support for your Business
Updated 12th May 2020

This scheme has been set up 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
  • Government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months
  • Borrower always remains fully liable for the debt
  • 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%
  • Early repayment is allowed with no fees
  • Successful applicants should expect to see the funds in their bank accounts within 24 hours

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.

Eligibility criteria…

  1. Business is based in the UK and was established by 1 March 2020
  2. Business has been negatively affected by coronavirus
  3. Business was not an ‘undertaking in difficulty’ as at 31 December 2019
  4. Earns more than 50% of its income from its trading activity
  5. The Scheme is not available to companies already claiming under the Coronavirus Business Interruption Scheme (CBILS). However, CBILS funding under £50,000 can be converted into a Bounce Back Loan as long as this is arranged with your lender by 4 November 2020.

Tip…be prepared!!!

Interested business owners should check they have online access to their business bank account.

Although the application process is very straightforward, some banks are asking for further information to assist with the processing of the loan. To guide you, here is a list of the information requested by Starling bank:

All applicants will need:

  • An activated Starling business bank card, and
  • A verified email address

In addition…Limited companies will need:

  • All persons of significant control added to your Starling business account

Sole traders who started trading on or before 5 April 2019 will need:

  • Your 2018/2019 Tax return
  • Your 2018/2019 Tax calculation (SA302), which you can find on your government gateway account

Sole traders who started trading between 6th April 2019 and 1 March 2020 will need:

  • Your Unique Tax Reference (UTR) number, and one of the following:
    • your VAT number if you are VAT registered or,
    • your 2019/2020 tax return.

Starling are clear they are requesting this additional information to verify your business, not to assess viability.

Remember: this is guidance and the exact information you will need will vary from lender to lender

How we can help…

We have also produced a short video discussing Bounce Back loans in further detail.

So far, the banks have been very quick to turnaround applications and some businesses have received funds the same day. As ever, we would always urge businesses to borrow responsibly and plan your cashflow carefully. This will ensure you have funds available to make repayments.

If you require further support with your business planning and cashflow forecasting, do get in touch…we can help

As ever, Adams O’Rourke are here if you need any further assistance regarding Covid-19 business support. Click here to get in touch with us.
Take care everyone!

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