Orr Litchfield

Solicitors and Business Lawyers

Business Bounce Back Loan Scheme

The Bounce Back Loan scheme was announced by the UK Government on 27th April 2020. Under the scheme, small and medium-sized businesses, which have been affected by the coronavirus outbreak, will be able to apply to borrow between £2,000 and £50,000.

The key features of the Bounce Back Loan scheme are:

1. Status – This scheme is not available yet. It is due to be launched on Monday, 4th May 2020.

2. Eligibility – SME’s (a) based in the UK, (b) which have been negatively affected by coronavirus, and (c) were not an ‘undertaking in difficulty’ on 31st December 2019. An ‘Undertaking in difficulty’ is defined in Article 2(18) of the Commission Regulation (EU no. 651/2014) of 17th June 2014. 

You will not be able to obtain a Bounce Back Loan if you have already obtained a loan under Coronavirus Business Interruption Loan Scheme (‘CBILS’). However, if you have received a CBILS loan of up to £50,000 then you will be able to arrange with your lender to transfer your CBILS loan to the Bounce Back Loan Scheme provided that you do so by 4th November 2020.

3. Ineligible businesses - The following businesses are not eligible for the Bounce Back Loan scheme – (a) Banks, insurers and reinsurers (but not insurance brokers), (b) public-sector bodies, (c) grant-funded further-education establishments, and (d) state-funded primary and secondary schools.

4. Method of loan application – You should be able to apply through a short and simple form on your bank’s online banking website.

5. Nature of finance – Loan facilities.

6. Amount of finance – Between £2,000 and £50,000.

7. Interest and fees – There will not be any fees or interest to pay for the first 12 months. The government has also stated that it will work with lenders to agree a low rate of interest for Bounce Back Loans.

8. Repayment terms – Up to 6 years. No capital repayments during the first 12 months.

9. Liability - The borrower remains 100% liable for the debt.

10. Government Guarantee to the lender - The scheme provides the lender with a 100% government-backed guarantee against the outstanding balance of the loan facility.

11. Borrower Security - It is anticipated that these will not be required.

12. Borrower Personal Guarantees – It is anticipated that these will not be required.