New 100% government backed loan scheme for small business

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The Chancellor has announced a new loan scheme for small businesses who can borrow between £2,000 and £50,000, and access the cash ‘within days’.

Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders Rishi Sunak announced today (Monday, April 24).

The new Bounce Back Loans Scheme will be interest free for the first 12 months, and has been set up to help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.

The government, which has been consulting extensively with business representatives about the design of the new scheme, will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months.

No repayments will be due during the first 12 months.

The loans will be easy to apply for through a short, standardised online application.

The loan should reach businesses within days- providing immediate support to those that need it as easily as possible.

The scheme will launch for applications on Monday, May 4.  

Firms will be able to access these loans through a network of accredited lenders.

ELIGIBILITY

You can apply for a loan if your business:

•           is based in the UK

•           has been negatively affected by coronavirus

•           was not an ‘undertaking in difficulty’ on 31 December 2019.

WHO CANNOT APPLY

The following businesses are not eligible to apply:

•           banks, insurers and reinsurers (but not insurance brokers)

•           public-sector bodies

•           further-education establishments if they are grant-funded

•           state-funded primary and secondary schools

•           if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

NOTE: If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.

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

The Chancellor of the Exchequer, Rishi Sunak, said:

“Our smallest businesses are the backbone of our economy and play a vital role in their communities,” said Mr Sunak.

“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.”

More information about the scheme will be published shortly.