New Coronavirus ‘Bounce Back’ Loans Announced for Small Businesses

Yesterday the Chancellor, Rishi Sunak, announced a new 100% government backed loan scheme for small businesses. We await the detailed guidelines, but the key points are as follows:

• 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, as the Government will pay this
• Businesses will not need to pay any fees for the first 12 months
• No repayments will be due in the first 12 months
• Businesses can apply online via a short and simple form

The loans will be based on 25% of a business’s turnover, up to a maximum of £50,000, and the lender will not need to consider any forward-looking business viability tests.

The new Bounce Back Loans are separate from the Coronavirus Business Loan Scheme (CBILS) and we understand that businesses will not be able to access both loan facilities.

The scheme will launch for applications at 9am on Monday 4 May through a network of accredited lenders. The loan funding should reach most businesses within 24 hours of approval.

The government has said that they will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and to agree a low standardised level of interest for the remaining period of the loan.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

Photo by engin akyurt on Unsplash