- BBLS enables small and mid-scale businesses to borrow money from £2000 to £50,000.
- You must be a registered business or a holder of a sole trader account to be eligible for this loan.
- Currently, there are 18 lenders listed in the scheme.
The Covid-19 situation is challenging for all of us. Businesses have particularly suffered significantly during this crisis. With strict lockdowns and restrictions on public transport, it has become difficult for businesses to maintain their supply chain, and cater to the needs of their customers. EEA citizens and even people holding an Indefinite Leave to Remain status (ILR) and other specialized business visas are struggling to cope with the situation.
In response to the current Covid-19 pandemic, the UK Government has announced numerous schemes to support businesses.
One of those schemes is a Business Bounce Back Loan (BBLS). This scheme has been introduced to help small business owners, especially those whose businesses have been greatly affected by the crisis.
You must be a registered business or a holder of a sole trader account to be eligible for this loan. The government offers 100% financing, and there won’t be any interest nor fee to pay for the first year. However, you’ll be required to pay a 2.5% rate of interest after 12 months.
Even businesses that need bigger loan amounts are entitled to receive facilities and government support. (Please click this link to know more about those offers).
Coronavirus Business Bounce Back Loan Scheme – Key Features
- Loans of between £2000 and £50,000 will be granted with a 25% annual turnover
- This amount should be used as working capital or an investment for your business
- There will be no interest for the first year. After that, there will be a fixed 2.5% rate of interest per year
- There will be no capital repayments for the first year, meaning you’ll not be liable to repay this amount in this time period
- The total loan term is 6 years. But, you can repay your loan before the due time to avoid repayment charges
Rishi Sunak, the Chancellor of the Exchequer, announced loan details on 27th April 2020. According to him, “There will be no forward-looking tests of business viability; no complex eligibility criteria. Just a simple, quick, standard form for businesses to fill in,” he added.
This is what makes this loan different from CBILS. Noticeably, CBILS needs businesses to provide a detailed business plan.
Another major difference is that the loan is 100% guaranteed in the case of BBLS. But only 80% of the money was guaranteed in the CBILS situation.
Because of this reason, more financial institutions may be interested in offering them. Also, these loans are easier to apply because of the ‘quick standard form’ promised by the government.
The delivery speed is another point of difference. For most businesses, this loan should arrive within 24 hours of approval. CBILS, on the other hand, may take up to 6 weeks.
The only advantage of the CBILS loan is the availability of larger sums of money. You’re not eligible to apply for the Bounce Back Loan Scheme if you’re already claiming under CBILS.
However, if you have already received a loan amounting 50,000 under the CBILS scheme, and looking to transfer it into the Bounce Back program, you can do that with the help of your lender.
According to Steve Solomon, Director of Professional Services, for National Westminster Bank, “Eligible customers will access funding through a simplified application process, with no requirement for viability or affordability checks.”
“These are loans, not grants, and must be repaid. However, because access to this finance is being made very easy and quick, it should help small businesses who need immediate and urgent cashflow support at this time.”
“All of the banks will carry out their standard checks to ensure they are providing Bounce Back loans to eligible businesses and not providing loan facilities to fraudsters. The intention is to provide the money to customers very quickly with documentation electronically signed and then get the credit to customers’ accounts very quickly,” he explained.
Who Can Apply for the Bounce Back Loan Scheme? (Eligibility Criteria)
In order to apply for the BBLS, you must:
- have been negatively affected by the crisis
- be an acknowledged UK business or a tax payer in the UK
- have a solid credit standing. Also, you must not have been declared bankrupt in the past
- not be going through debt restructuring
- started and trading by 1st March 2020
- not have applied for a Bounce Back Loan from multiple lenders
- not have applied under CLBILS, CBILS, and CCFF
- get up to 50% of your income from trading
Also, the nature of your business must not be a charitable organisation, a public sector institution, bank, or a building society.
Things you’ll need to Apply for the Bounce Back Loan Scheme
Requirements for All Applicants
- An activated business bank card
- A verified email ID
Requirements for Limited Companies/Limited Liability Partnerships
- Those sole traders who started trading before 5th of April will have to submit their tax returns (2018/2019)
- Those sole traders who started trading before 5th of April will have to submit their tax calculation (2018/2019)
- Those sole traders who started trading between 6th of April and 1st March 2020 will have to submit their VAT number
- Those sole traders who started trading before 5th of April will have to submit their tax returns (2019/2020)
- Those sole traders who started trading before 5th of April will have to submit their tax calculation (2019/2020)
How to Apply for a Bounce Back Loan Scheme?
Currently, there are 18 lenders listed in the scheme. This number includes some of the most prominent retail banks as well. You can choose any one lender based on your requirements by browsing through the lender’s website.
- You have to complete and submit the application form and self-declare that you’re eligible
- Upload all the supporting documents
- Submit your declaration
- Upon approval, your lender will send you an offer letter and an e-contract
The list of accredited banks is available on the British Bank website. These banks include:
- Lloyds Bank
- Starling Bank
- The Co-operative Bank
- Bank of Ireland UK
- Ulster Bank
- Allied Irish Bank
- Bank of Scotland
- Clydesdale Bank
- HSBC UK
- Skipton Business Finance
- Yorkshire Bank
Noticeably, if one lender turns you down, you can approach other lenders listed in the scheme.
What’s the Cost of the Bounce Back Loan Scheme?
The borrower will not have to make any interest repayments in the first year of receiving a loan
However, you have to pay interest from the 13t month. For this particular loan, the repayment will be divided into two parts – a principal repayment and an interest repayment
Here are some important points to consider when you apply for the BBLS to support your business:
- Your lender will assess your repayments. Also, you can ask for assistance if you’re finding it difficult to repay your loan
- Your lender can make adjustments to your repayment schedule if they identify you as a vulnerable person
- Your lender may also grant you a fair amount of time if you default to repay your loan. The bank won’t mark you default in their books of records in this particular case
- Make sure you keep in touch with your lender and clearly discuss all terms and conditions before signing up
Make sure you immediately seek your lender’s help, if:
- you miss a repayment on your loan
- you’re not able to pay your loan altogether
- regular information about rate of interest and update about repayment schedule
Is the Bounce Back Loan Scheme Different from other Coronavirus Financial Support Programs?
Yes, all Coronavirus support programs are different and come with different terms and conditions. Let’s take an example of CBILS, which is also run by the British Business Bank. However, you would be able to get a loan of over £50,001 through CBILS while BBLS offers a loan amount of not more than £50,000.
There’s no guarantee that your application will be approved. However, if you pay attention to the conditions, your application is more likely to be accepted. The purpose of this scheme is to help out businesses in need.
If you miss a repayment, make sure you get in touch with your lender as soon as possible. Also, this scheme is the most suitable option for businesses that need a loan under £50,000.
This is a great opportunity for small and mid-scale businesses. This scheme enables them to keep their business running in the post-Coronavirus period.
There’s still a need for many other support programs that can provide financial assistance to startups and budding entrepreneurs.
Despite the fact that many UK businesses have planned to take their business online, there are still many brick and mortar stores that require financial help during these challenging times.
Have you utilized any of those schemes yet to support your business? Feel free to drop your feedback below as we would like to know about your experience.