'Bounce Back' Loans Announced by Chancellor
Following criticism over difficulties faced by smaller business accessing CBILS loans, the Chancellor last night announced the government’s ‘Bounce Back’ loan scheme in response.
Operating under a similar mechanism as CBILS but with a quicker, simplified application process promised, the scheme offers fully guaranteed loans of between £2k and £50k capped at 25% of turnover (up to a maximum of £200k) and is due to go live on 4 May.
Eligibility remains the same as CBILS in that the business must:
- Be UK based
- Have been adversely affected by Coronavirus
- Not be an ‘undertaking in difficulty’ on 31 December 2019 (i.e. have retained losses that do not exceed 50% of their equity balance)
In summary the terms and conditions of the loans are expected to include the following:
- 100% government guarantee to lenders (therefore no need for personal guarantees)
- Maximum 6 year term
- Interest and capital repayment free for the first 12 months
- No fees on setup
- Interest rates to be determined but expected to be low
- Cash delivery within 24 hours of approval
The guidelines state that you cannot apply if you’re ‘already claiming under the CBILS scheme’ – the detail of this point hasn’t yet been made clear, however our assumption is that a failed CBILS request would not prevent application to the Bounce Back scheme provided the business met the eligibility criteria.
The government have also stated that CBILS loans up to £50k either in process or already granted can be converted to the Bounce Back scheme between now and 4 November.
This is by arrangement with the lender themselves and should therefore provide scope for this type of funding for eligible businesses regardless of the success of a prior CBILS application.
Given the launch date of 9am next Monday we expect further guidance on the application process in the coming days – we will of course provide further information as soon as we have it.
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