Bounce Back Loans
posted on May 4, 2020in the Blog Category
Bounce Back Loans
Today the Government launched the latest in its series of support packages for UK businesses impacted by Covid: the Bounce Back Loan scheme.
The new scheme is designed to help smaller firms through the lockdown crisis. Businesses have been fast out of the traps to secure funding, with Barclays reporting 200 applications in the first minute and Lloyds 5,000 within three hours.
It scheme offers loans up to £50,000 and is designed to be simpler and quicker than the existing Coronavirus Business Interruption Loan Scheme (CBILS). To re-cap, CBILS offer loans of up to £5m and is available for companies with a turnover of less than £45m.
To date the CBILS has come in for in for criticism. Banks have been applying lending criteria, which makes it harder for smaller enterprises to qualify while locked down. Of 52,807 loans applied for almost 28,000 have still to be approved and we know first hand the difficulty businesses are facing when trying to secure funding.
The government insists the new bounce back loans will be easier to apply for. Details of the scheme are available by clicking here
The government has written to those lenders offering this scheme and stated the interest rate should be no more than 2.5%.
Some banks will choose some criteria which is specific to them. For example Starling Bank has disclosed its loans will only be available for businesses which bank with them and have been trading for more than 18 months.
Many of the high street banks launched at 9am today but other lenders have stated they will commence their lending over the next few days.
Remember, the maximum a company can obtain through the Bounce Back Loan scheme is £50k. Any higher requests should be applied for via the CBILS.