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Government Bounce Back Loan providing a boost for small businesses

Tom Leigh profile picture

Tom Leigh, from our accounts department, provides information on the recent government-backed loan scheme available to smaller companies.

With COVID-19 creating more uncertainty by the day, it is great to hear that the government is offering additional cash support to prevent small businesses from going under. We understand that this is a troubling time for many SMEs, so it's heartening to be able to outline what the new government coronavirus Bounce Back Loan means. As you'll see, it is designed specifically to help the smaller companies that play such a vital role in our economy.

Details of the Bounce Back Loan Scheme

  • Businesses will be able to access between £2,000 and £50,000, which will be interest-free for the first 12 months.
  • The loan scheme will be available from Monday 4th May through a range of popular lenders.
  • The government have provided lenders with a 100% guarantee for the loan. This is higher than the 80% backing given with the Business Interruption Loan, instilling more confidence in lenders and therefore resulting in a higher acceptance rate for the loans.

The fees and interest are both paid by the government for the first 12 months. The government has claimed that the level of interest will be low for the remaining part of the loan. We will keep you updated as soon as any more information is available on this.

Eligibility for Bounce Back Loan Scheme

  • Most UK businesses that have been negatively affected by the coronavirus crisis can apply
  • You should not already be claiming the Coronavirus Business Interruption Loan (CBILS), although businesses can transfer their CBILS to this scheme.
  • You should not be a bank, insurer, reinsurer or a public-sector body
  • You cannot have been in financial difficulty as of 31st December 2019.

This scheme is intended to help small businesses, which require a quick cash injection in order to cover costs throughout the coronavirus pandemic. It is in addition to the £6 billion awarded in business grants, Job Retention Scheme and tax deferrals, which have been put in place to ensure that small businesses are not short of cash over the next few turbulent months. It is likely that applications for this scheme will require some supporting accounting documents and reports, in order to provide a business case for the loan. Your accountant should be on hand to help prepare these documents, which might help increase the likelihood of acceptance.

If you need any more information or help in securing a loan, simply contact us on 0115 955 5500 or email enquiries@pagekirk.co.uk.

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