April 29th, 2020 / Insight posted in Articles, Coronavirus, Operations, Tax

Coronavirus: new 100% government-backed bounce back loan scheme

In another measure designed to ease pressure on businesses affected by the Coronavirus crisis and keep small businesses operating, the government announced on 27 April a new 100% government-backed loan scheme for small and medium businesses.

  • Eligible businesses will be able to borrow between £2,000 and £50,000
  • Loans will be interest-free for the first 12 months
  • No repayments will be due during the first 12 months

Application can be made online via a short form when the scheme opens on Monday 4 May and the government says cash should reach businesses “within days” of making the application.

Loans will be provided by a network of accredited lenders and the government will provide lenders with a 100% guarantee for the loan and will pay any fees and interest for the first 12 months. Loan terms will be up to six years. The government are working with lenders to agree a low standardised level of interest for the remaining period of the loan.

Eligibility criteria

To be eligible for the scheme, businesses must be UK-based and have been negatively affected by Coronavirus.

Banks, insurers, public sector bodies, state-funded primary and secondary schools and grant-funded further education establishments are not eligible to apply.

You cannot apply if you’re already claiming under the Coronavirus business interruption loan scheme (CBILS). However, you can arrange with your lender to transfer a CBILS loan of up to £50,000 into the bounce back loan scheme until 4 November 2020.

Article originally drafted by Rachel Thomas, Moore UK