Bounce Back Loan Scheme - Welcome news for start-ups and small businesses

Published 29 abril 2020

Rishi Sunak has now announced a new scheme aimed at helping small and scaling businesses through the C-19 crisis. The microloan scheme, which will be in place from next Monday (4 May) will be 100% government-backed (rather than 80%), and is intended to bolster the existing range of measures supporting these businesses through the pandemic. It comes amid criticism of the existing Coronavirus Business Interruption Loan Scheme (CBILS).

The headline points from the Chancellor's announcement are:

• Businesses will be able to access loans worth 25% of their turnover, between £2,000 and £50,000. A turnover of £200,000 or more will therefore be needed in order to qualify for the maximum loan.
• The loan will be interest-free for the first year, with no repayments during that period (early repayments can be made without penalty).
• Applications will be made via a simple online form (coming on-stream on Monday), and, importantly, there will be no viability test. Some fraud tests will be required (e.g. provision of a tax return).
• Successful applicants should have access to funds within days (perhaps as quickly as 24 hours).
• There are no restrictions on what the loan can be used for and personal guarantees cannot be taken.
• The applicant business will need to have been incorporated from 1 March 2020 (as compared to the June 2019 cut-off date in Germany's microloan scheme).

The scheme will hopefully ensure that small businesses, which (as the Chancellor noted) make up the "backbone of our economy", will have access to the vital funds they need in order to weather this storm.

Our team has extensive experience supporting early-stage and fast-growth scaling business on matters relating to finances and more generally. If you have any queries or would like to speak to one of our experts please feel free to get in touch.