Bounce Back Loan scheme

Since our last update on the government backed schemes to support businesses and the economy, the Bounce Back Loan scheme (BBLS) has gone live. With the Coronavirus Business Interruption Loan scheme (CBILS) due to end in September and the BBLS in early November, business owners need to continue closely monitoring their cash flow requirements.

It seems longer than 2 months ago that CBILS went live. We have been supporting clients through that application process and it continues to be a different experience each time! We also have a number of clients who are waiting to see how the government will ease the lockdown restrictions and the impact that might have before they make applications.

In the meantime the BBL scheme has also gone live. In overview the key features of the scheme are as follows:

• Loans range from £2,000 up to 25% of turnover, capped at a maximum of £50,000
• Lender provided with a full government backed guarantee (100%), both capital and interest
• Government will cover the first 12 months of interest payments
• Interest rate set at 2.5% per annum
• Length of loan is 6 years but early repayment is allowed without fees being charged
• Lenders not permitted to take personal guarantees
• No fees to access the scheme for either businesses or lenders
• Businesses which receive a loan from the BBLS can also still access the CBILS, but the loan from BBLS must be repaid.

The aim was to keep the BBLS application simple for borrowers, mainly through online portals. However, we are hearing that lenders may have to enhance their review procedures as many applications have been fraudulent.

One point to note is that, as with CBILS, applicants should check whether they meet the eligibility criteria (which are broadly consistent with CBILS). However, we have had a client who was unsuccessful in obtaining a loan under CBILS but got one under BBLS.

As our experience of accessing the various schemes grows we are able to guide business owners through the process. If you require support accessing CBILS or BBLS please get in touch.

Lastly, continuing a thread from our last update, it remains key that business owners and management continue to plan for cash flow requirements beyond these government backed schemes. Business planning is critical, as is having the facilities in place to fund working capital demands, we are here to help please get in touch.