Here’s everything you need to know about Bounce Back Loans!

What Are Bounce Back Loans?

Bounce Back Loans are intended to provide financial support to businesses across the UK witnessing tight cash flow and falling revenues as a result of the COVID-19 outbreak.

The Government has launched its Bounce Back Loans Scheme, offering loans of between £2000 and £50000 at a fixed bounce back loan interest rate of 2.5 percent, providing a quick and easy way to access loans.

The cash for it is expected to land within days, and the length of the loan is for a period of six years.

Below we mention some more features of this scheme:

These loans will be backed for lenders by the Government completely, and businesses can apply online through a simple and short form.
To avail of these loans, small businesses can apply to accredited lenders after filling out a simple online form with only seven questions.
Any business that has already taken out a Coronavirus Business Interruption Loan of £50,000 or less can apply to have this switched over to Bounce Back Loans.
The Government will cover the cost of any fees and interest for the borrower for the first 12 months.
No Bounce Back Loan Repayments will be due during the period to enable firms to get back on their feet.
Loans will be from £2,000 up to 25 per cent of a business’ turnover or £50,000, whichever is lower.
Borrowers will fill in a two-page application form in which they will certify that they have a viable business, lifting obligations on lenders to carry out their checks.
No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle.
Banks will no longer require forward financials or business plans.

Please note that there is no fee to access this scheme for either businesses or lenders. You can read more here.

Are You Eligible For Bounce Back Loans?

For a business bounce-back loan to be eligible for this scheme, it

Must be UK- based established by March 1 2020
Must have been adversely affected by the coronavirus
Must not be availing of a government backed coronavirus loan scheme
Must not be in liquidation, bankruptcy or undergoing debt restructuring

However, eligible companies will be subject to Know Your Customer (KYC), standard customer fraud, and anti-money laundering (AML) checks before any loan is finalized. Some State Aid Restrictions may also be applied to applications.

Also, the borrower shall always remain 100% liable for the debt.

However, the following sectors are not eligible for this scheme according to the Bounce Back Loans terms:

Insurance companies
Credit Institutions
State-funded primary and secondary schools
Public Sector Organizations

Where Can You Find Bounce Back Loans?

Accredited lenders and partners can be found across the UK on the British Business Bank Website here

They include:

How To Apply For Bounce Back Loans?

Businesses will be required to fill in a short online application form on their lender’s website, which self-certifies whether they are eligible for this facility.

Follow these steps to apply for this loan:

Find a lender through the British Business Bank Website here.
Approach a lender who will ask you to fill in a short online application form on their website, which self-certifies whether you are eligible for this facility.
Wait for the lender’s decision, who will decide whether to offer you finance or not.

Please note that under this scheme, a lender cannot take any form of personal guarantee or take recovery action over a borrower’s personal assets.

Also, bear in mind that you can still approach other lenders in the scheme if one lender turns you down.

The Government has designed the Bounce Back Loans Scheme to be fast for lenders to process and easy for businesses to access.

Find more details here.

Will bounce back loans become grants?

The government gave these covid bounce back loans to help businesses during a tough time. They expected the businesses to pay the money back. The Bounce Back Loans were never meant to be free grants that you don’t have to repay. The banks will try to get the money back from businesses that haven’t paid it yet, just like they would for any other loan you didn’t pay.

How Are Bounce Back Loans Different from the Coronavirus Business Interruption Loans Scheme?

Bounce Back Loans differ from Business Interruption loan schemes in terms of personal guarantees and affordability rules.

Businesses that apply for the Bounce Back Loans Scheme can do so without the need to use personal guarantees and will not need to meet any affordability requirements.

This also means that the businesses will not have the usual protections available to them for loans under £25,000

Nevertheless, they will be responsible for the decision to borrow the money and not the lender.

Coronavirus Business Interruption Loans Scheme, on the other hand, can include personal guarantees for loans above £250,000 and requires lenders to show the loan is affordable.

This means businesses will be able to retain their statutory rights as they would for an equivalent form of borrowing.

Also, the process is more stringent and requires evidence that the business is viable outside of this pandemic and can afford the monthly payments along with any debt already piled up.

How Long Is The Bounce Back Loan Scheme Available For?

Presently, the scheme is available until November 4 2020. However, the Government has the option to extend this.

Note:

Please bear in mind that most phone lines are likely to be busy as there is a high demand for finance through Bounce Back Loans. As a result, the branches may not be able to handle enquiries in person.

How can clients get credit terms of 10 years for loans?

Any new loans will get credit terms of 10 years. Below is an example of the total interest charged if the loan were to be repaid over 10 years versus 6 years.

 Those who have already taken a loan over a 6-year term should talk to their lenders and get their BBLS extended over 10 years.

Need more help?

Just fill in your details here If your company is struggling to repay its Bounce Back Loan or any other business debt matters.

Lanop Business and Tax Advisors are here to support you in every way possible. We are a team of expert financial consultants and Advisors that’s approachable and skilled. With over 15 years of experience, we have been assisting businesses just like yours. Our team of experts can offer advice on the best approach to manage your debt problems, whether it’s a Bounce Back Loan or another kind of business debt. Our Virtual Finance Directors are always ready to lend a hand.

Dealing with debt can be overwhelming for directors. We are here to help you navigate these challenges and find the most suitable solutions according to your company’s financial situation. Contact us today to start addressing your company’s debt matters and take a step toward a fresh start. Our VFDs can support beyond Bounce Back Loans, guiding you through various financial difficulties your company may face.

Aurangzaib Chawla

Tax Partner

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About the Author:

AURANGZAIB CHAWLA

ac@lanop.co.uk

Aurangzaib Chawla is a UK-based tax advisor and Managing Partner at Lanop Business & Tax Advisors.

With nearly two decades of experience, he supports individuals, landlords, and SMEs with proactive tax planning and compliance. Known for simplifying complex tax legislation, Zaib helps clients minimise liabilities while building sustainable, tax-efficient strategies for long-term success.

Let’s talk through your options, no jargon, no pressure.

+44 208 392 9375

About the Author:

AURANGZAIB CHAWLA

Aurangzaib Chawla is a UK-based tax advisor and Managing Partner at Lanop Business & Tax Advisors. With nearly two decades of experience, he supports individuals, landlords, and SMEs with proactive tax planning and compliance. Known for simplifying complex tax legislation, Zaib helps clients minimise liabilities while building sustainable, tax-efficient strategies for long-term success.

Let’s talk through your options, no jargon, no pressure.

+44 208 392 9375

ac@lanop.co.uk

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