[UPDATE] New lifeline for small businesses as 100% government backed loan scheme launches today
[UPDATE 4th May 2020] The government’s ‘Bounce Back Loan Scheme’ has launched today, enabling Britain’s small businesses to apply for quick and easy-to-access loans guaranteed 100 per cent by the state for an amount of up to £50,000 – with the cash expected to land within days.
The government has also agreed with lenders that an affordable flat rate of 2.5% interest will be charged on these loans. And any business that has already taken out a Coronavirus Business Interruption Loan of £50,000 or less can apply to have these switched over to this generous new scheme.
According to the government, the loans are available through a network of lenders, including the five largest banks.
[28th April 2020] In a bid to provide cash quickly to small businesses, the government has launched the new Bounce Back Loan scheme, aiming to swiftly provide between £2,000 and £50,000 of cash to SMEs within days.
The loans will be interested free for the first 12 months and, importantly, will be 100 per cent guaranteed by the government.
It comes as reports that the government’s Coronavirus Business Interruption Loan Scheme – which sees the government guarantee 80 per cent of loans – has been slow to provide access to finance quickly to businesses by some lenders.
Designed to be a fast-track finance scheme, the new Bounce Back Loans will provide up to £50,000 of cash for small businesses which can be applied from Monday 4th May 2022 via a short and simple online form, says the government.
One applied for, loans should reach businesses bank accounts within days.
Loans terms will be up to six years and companies will not be due to make repayments in the first 12-months which are interest-free.
Importantly, companies that have already claimed under the Coronavirus Business Interruption Scheme will not be eligible to claim under the new Bounce Back Loan scheme, however, can arrange with their lenders to transfer their received loan to the new scheme if the amount received was up to £50,000.
Chancellor Rishi Sunak said: “This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.
“This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses.”
The government has pledged to work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and will also agree a low standardised level of interest for the remaining period of the loan.
Dame Carolyn Fairbairn, CBI Director-General, said: “Thousands of businesses could be saved by this lifeline. Banks now need to continue their work in overdrive to get the loans flowing faster.
“It’s good to see the Chancellor listening to business, proving that where there’s a need to adjust schemes, he will do what it takes. It will be vital to maintain this approach in the months to come. Every job saved today will ensure a faster recovery tomorrow.”
