New government ‘bounce back’ loan issued as dissatisfaction grows with business loan

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The new support measure, dubbed the ‘bounce back’ loan, will be available from today, and allows businesses to apply for up to £50,000. The action is the latest move by the government to ensure all businesses are protected during the crisis. This is a smaller amount than what is offered by the Coronavirus Business Interruption Loan Scheme (CBILS), but the Treasury states this is a quicker and easier loan. 

Plans were announced by Mr Sunak last week, however he has been quick to action the support amid complaints surrounding the CBILS.

Almost 28,000 of the 52,807 loans have yet to be approved, and banks have been criticised for slow action.

However, banks have said the sharp increase in companies approaching them has convoluted their ability to provide the loans with ease. 

To apply for the loan, businesses will be required to answer seven questions related to their financial standing and economic needs during this time.

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Bounce Back Loan: The loan will help smaller businesses (Image: Getty)

The Treasury has confirmed bounce back loans will be 100 percent guaranteed by the government, interest and payment free for the first year, and will then stand at 2.5 percent per annum afterward. 

There is no limit on the size of the business which can apply, however, bounce back loans are targeted towards smaller businesses.

Anywhere from £2,000 to £50,000 can be applied for, and sole traders and limited companies can also apply.

The Treasury has said loan funds will be available just days after application.

READ MORE: Rishi Sunak must help businesses get the money he’s made available

This is because the Chancellor, Rishi Sunak, stated banks would not have to undertake their usual viability checks, with the government taking on all risk. 

In a statement, the Treasury said: “The Bounce Back Loan scheme is the latest step in a package of world-leading support measures launched by Chancellor Rishi Sunak – with £7.5billion already awarded in business grants, four million jobs supported through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.”

A number of leading banks have announced they will be supporting businesses through the government-backed loan, including Santander, Barclays, Lloyds Bank and NatWest.

In order to be eligible, a company must have been trading on March 1, 2020 and must not have been an “undertaking in difficulty” as of December 31, 2019.

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Bounce Back Loan: Extra support is being given to struggling businesses (Image: Getty)

However, small companies are being encouraged to seriously consider whether this loan is right for them.

This is because if the loan cannot be repaid, banks will chase borrowers in the standard way and could seize assets or property as a result.

Stephen Jones, the chief executive officer of UK Finance, said he hoped the scheme would be available to as many small business customers as possible. 

Jonathan Ratcliffe, from commercial office agency, Offices.co.uk stated applying for the loan was quick and easy, but suggested Britons approach their bank first.

He said: “The Bounce Bank loan is great from our point of view. The process is extremely easy, early repayments are accepted, so hopefully things don’t get too bad and you can repay the loan early. My worry is that things drag on and we eat into the loan – but we have no choice.”

For those who have already applied for a loan under the CBILS, the ‘bounce back’ scheme is still available.

If the original application was under £50,000, it can be switched to the ‘bounce back’ system, and for those who already have a CBIL, the Treasury has confirmed this can be converted.

Tej Parikh, the chief economist at the Institute of Directors commented on the commencement of the scheme, stating: “The business interruption loan scheme has started to reach the front line, but small firms have still been having difficulty accessing finance.

“This additional measure should help more of those firms get the cash they need to see them through the weeks and months ahead.”

The government website includes a wide range of advice on actions businesses can take during the crisis, including loans, furlough, health and safety and increased funding and support. 


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