Bounce Back Loan Interest and Local Authority Grant Expansion

Interest Rates on Bounce Back Loans

Further to our announcement regarding the ‘Bounce Back’ loan scheme last week, the government have this weekend announced they will carry an interest rate capped at 2.5%.

The scheme is due to go live tomorrow (Monday 4 May) so we’re expecting guidance on the application process imminently – we’ll send out further details as soon as we have them.

Expansion of Local Authority Grants

On Saturday the government announced an expansion of £617m to the existing Local Authority Grant schemes (i.e. the Small Business Grants Fund and the Retail, Hospitality and Leisure Grants Fund) in a measure aimed at small businesses affected by Coronavirus but currently falling outside their scope.

In a departure from the present schemes, the grants will be made on a discretionary basis by the local authorities with direction to prioritise businesses that include the following:

• Those in shared-space accommodation
• Market traders
• Charities in properties that would ordinarily qualify for small business rate relief
• Bed and breakfasts that pay council tax rather than business rates

Businesses must be small (so less than 50 employees) and, as with other measures, be able to demonstrate a significant drop in income as a result of Coronavirus.

Grants are expected to be offered between £10,000 and £25,000 (the maximum available), with amounts less than £10,000 also an option depending on the approach taken by the authority in the allocation and distribution of its allowance.

The application process is yet to be clarified (assuming that is the mechanism by which these grants will be considered and offered), with the government due to issue guidance and allocations to local authorities later this week.

Given the onus on the local authority to determine the use of their funds based on local need and the likely application by a significant number of businesses, we expect the process to be somewhat slower than the existing grants.

We should have greater clarity on this once the guidance has been issued though and will provide updates on the process as soon as we have them.

If you have any questions regarding this or anything else please get in touch, and for regular updates, announcements and news please check our website (www.dsaprospect.co.uk) and make sure you’re following our LinkedIn page: https://www.linkedin.com/company/dsa-prospect-ltd