A new scheme, referred to as “bounce back loans”, will offer smaller loans than the existing Coronavirus Business Interruption Loan Scheme (CBILS). Unlike other help for business these are loans and not grants.
The Treasury is saying they will be quicker and easier to apply for and will have a 2.5% interest rate. The application form will be seven questions long and the loan is 100% guaranteed by the government, after much criticism over bank loans with an 80% guarantee.
The CBILS provides loans of up to £5m for companies with a turnover of less than £45m, however the loans have come in for criticism by particularly smaller businesses as banks have often applied their usual lending criteria, asking for director’s personal guarantees which makes it harder for smaller companies to apply. Of approximately 53,000 applications almost 28,000 have still to be approved.
Who can apply?
While the loans are aimed at smaller businesses, with £2,000 to £50,000 on offer, there is no limit on the size of business that can apply, this includes sole traders and limited companies.
How do you apply?
Businesses should apply through their own business bank, you answer seven questions about information concerning turn over and your tax details. The loans will have a flat rate of interest set at 2.5% with terms up to 6 years. The first year’s interest and fees will be covered by the Treasury and no capital payments will be required by the business for the first year.
As always before taking on debt you should consider you circumstances carefully.
You can find out more about the government help available to businesses in our COVID-19 Literature area here. Be sure to check out our full COVID-19 Hub here to find answers to your common questions, important and useful webinars and our new web series that helps to homeschool your children during lockdown!