Updated 4th May 2020
The Chancellor has written to all accredited CBILS lenders on the new Bounce Back Loan Scheme (BBLS) that provides for a 100% government guarantee.
The key points from the letter are:
- Interest rate set at 2.5%
- The minimum facility size for term loans and
overdrafts under current CBILS will increase to £50,001 to avoid any risk of
confusion or overlap between the two schemes. This change to the minimum
facility size will not apply to asset finance and invoice finance CBILS
facilities - Any customer with a CBILS loan or overdraft of
£50,000 or less will be able to switch that facility to a BBLS loan should they
choose to do so over the next few months
The 2.5% rate is lower than the banks have been offering on the CBILS facilities so there is a logic in businesses switching where relevant. It also provides a useful benchmark to judge bank offers under CBILS.
What we know so far:
- The Bounce Back Loan scheme will help small and medium-sized businesses to borrow from £2,000 up to 25% of a business’ turnover. The maximum loan amount is £50,000.
- The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.
- Loan terms will be for 6 years but early repayment is allowed, without early repayment fees. No repayments will be due during the first 12 months.
- The rate of interest will be 2.5% pa
- Lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).
- There is no fee to access the scheme for either businesses or lenders.
- The scheme will be delivered 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
You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS). However 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 Chancellor’s letter can be found online.
Links to application forms
