COVID-19 – Business Support – The Key Terms For The Bounce Back Loan Scheme Goes Live Today

The Bounce Back Loan Scheme goes live today and the British Business Bank have published more detailed guidance.

The main eligibility criteria for a business are:

  • it is engaged in trading or commercial activity in the UK and was established by 1st March 2020;
  • it is not registered as a business in difficulty at 31st December 2019;
  • it has been negatively affected by the COVID-19 pandemic;
  • it is not using any of the other COVID-19 schemes backed by the British Business Bank unless the Bounce Back Loan will refinance the whole of the existing facilities;
  • it is not in bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance;
  • it derives more than 50% of its income from its trading activity; and
  • is not in an excluded sector which are:
    • banks, insurers and reinsurers (but not insurance brokers)
    • public-sector bodies
    • state-funded primary and secondary schools.

The key terms for the scheme itself are as follows:

  • Loans range from £2,000 up to 25% of a business’ turnover capped at a maximum loan amount is £50,000.
  • The scheme provides the lender with a 100% government-backed guarantee against the outstanding balance of the finance, both capital and interest. However, the borrower remains fully liable for the debt.
  • The Government will make a Business Interruption Payment to cover the first twelve months of interest payments.
  • The borrower does not have to make any repayments for the first twelve months.
  • The interest rate for the facility is set at 2.5% per annum with the lenders unable to vary this rate.
  • The length of the loan is six years but early repayment is allowed without early repayment fees.
  • Lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets.
  • There is no fee to access the scheme for either businesses or lenders.

For those businesses looking to access there scheme, the first port of call should be your current bank so long as they are on the British Business Bank accredited lenders list here.  All the main Hight Street banks are on this list.

However, you can apply to any lender on this list under the scheme.

We will continue to report any developments as they come through.  In the meantime, please email if you have any questions or would like any other information.