What is a Bounce Back loan?
The scheme provides financial support to small and medium-sized firms that are losing revenue as a result of the coronavirus outbreak.
The scheme allows businesses to borrow between £2,000 and £50,000, but each company can only borrow up to 25 per cent of their turnover (turnover is usually based on the 2019 calendar year).
There are no fees for Bounce Back loans. There are no requirements to repay capital in the first 12 months and the loans are interest-free during this period. After the 12-month period, the interest rate is 2.5 per cent a year.
The BBLS does not require personal guarantees from business owners.
Following a government announcement in December 2020, the scheme has been extended and will now close on 31 March 2021. Businesses will be able to start an application for finance until the end of the day on this date.
How can I apply for the BBLS?
The government recommends that businesses apply for Bounce Back loans from their existing business bank, so this is the best place to start.
Indeed, some banks are only offering Bounce Back loans to existing customers.
Applications are completed online and, if you have access to the necessary financial information, it should be possible to complete the application in less than an hour.
The British Business Bank has a list of banks offering Bounce Back loans.
What are the key steps for a successful BBLS application?
Businesses have to meet the eligibility criteria (see below question and details on the gov.uk website).
It’s helpful to know what to have to hand when starting an application:
- The majority of businesses applying to their existing bank will not have to provide additional documentation
- You normally need to provide your turnover for the previous calendar year. This may not match your financial year and may need calculating
- Basic details about your business, including your bank account details
What are the eligibility criteria for the BBLS?
You can apply for a loan if your business is based in the UK, was established before 1 March 2020 and has been adversely impacted by the coronavirus.
More details on the criteria are available on the gov.uk website.
How long does it take to apply for the BBLS?
BBLS applications are online and can be completed in under an hour.
Lenders are expected to assess applications in a matter or days and it’s common for the money to be available either immediately or within a week or two.
In some instances, the lender may ask you for additional information, such as an HMRC self-assessment tax return.
What banks are offering Bounce Back loans?
The government advises applying to the BBLS with your existing bank and it’s worth checking with them first because it helps streamline the process. As the terms and fees for the loan are fixed, there’s no need to shop around for the best supplier.
Some banks will only take BBLS applications from existing customers.
The British Business Bank has a list of approved suppliers.
What are the chances of getting a Bounce Back loan and what share of businesses are successful?
The BBLS has been designed to help small and medium-sized businesses access finance quickly.
Over 1.5m businesses had applied to the BBLS by 20 August 2020, with 1.2m or 81 per cent being successful, according to the government’s October update. Around £38bn has been lent to small businesses.
The success rate for the Coronavirus Business Interruption Loan Scheme (CBILS) is considerably lower at 47 per cent in the same period.
Do I have to specify what the money will be used for?
Funding from the BBLS must be used to provide an economic benefit to the business, such as providing working capital, and not used for personal purposes.
It can’t be used for export activity.
It can be used for refinancing, such as paying off existing debt.
What is the Coronavirus Business Interruption Loan Scheme?
The Coronavirus Business Interruption Loan Scheme helps small and medium-sized businesses access loans and other kinds of finance up to £5m.
As part of the scheme, the government guarantees 80 per cent of the finance to the lender and pays interest and any fees for the first 12 months. This means that if a business defaults on the loan, the lender will be paid back by the government. However, it’s important to note that the borrower will still be liable.
What are the eligibility criteria for the CBILS?
The Coronavirus Business Interruption Loan Scheme is available to businesses with turnover of up to £45m.
Companies accessing finance under the scheme will need to show that the business would be viable were it not for the pandemic and has been adversely impacted by the coronavirus.
The need to demonstrate these points makes the finance different to the Bounce Back loan, which is based on a self-assessment.
There are a number of types of businesses that do not qualify for CBILS:
- Banks, insurers and reinsurers (but not insurance brokers)
- Public-sector bodies
- State-funded primary and secondary schools
The British Business Bank has a CBILS eligibility checklist that is a helpful place to start.
How do I apply for the CBILS and how long does it take?
There are over 100 accredited lenders offering finance through the Coronavirus Business Interruption Loan Scheme (CBILS). The British Business Bank has a complete list of CBILS lenders, which allows you to search by region and type of finance.
Does the CBILS require a personal guarantee?
Lenders are not allowed to take personal guarantees of any form for finance facilities below £250,000.
For facilities above £250,000, personal guarantees may still be required. However, these cannot include the Principal Private Residence (the business owners’ home). Recoveries under these are capped at a maximum of 20 per cent of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.
Finance 
