It continues to be a stressful time for many businesses – large and small.
But while we are all in the midst of waiting on grant cash, furlough repayments and loan applications, there is now another lifeline in the pipeline so-to-speak.
Earlier this week, small and medium-sized businesses affected by coronavirus were told they could apply for loans of between £2,000 and £50,000 through a new Bounce Back Loan scheme.
The scheme opens on Monday (4 May).
How does it work?
The Bounce Back Loan scheme will see the government guarantee 100% of the loan and there will be no fees or interest payable for the first 12 months.
Loan terms will be up to six years, with no repayments due during the first 12 months and the scheme will be delivered through a network of accredited lenders.
The government has said it will work with lenders to agree a low interest rate for the remaining loan period.
Am I eligible?
Participants can apply for a loan if their business:
is based in the UK
has been negatively affected by coronavirus
was not an undertaking in difficulty on 31 December 2019.
The following businesses are not eligible:
Banks, insurers and reinsurers (but not insurance brokers)
Public-sector bodies
Further-education establishments, if they are grant-funded
State-funded primary and secondary schools
Any business already claiming funding under the Coronavirus Business Interruption Loan Scheme (CBILS).
Is it all its cracked up to be?
As far as the packages the government has already put in place to support struggling businesses, the one causing the most problem seems to be access to the Coronavirus Business Interruption Loans.
Many firms have told us that they can’t get these emergency loans because some banks are using personal guarantees in the form of savings and mortgages to secure lending to small businesses or putting in place punishing interest rates that made it impossible for companies to borrow money.
It remains to be seen whether this will also be the case for bounce back loans too.
Most telling will be how quickly the system can deliver cash payments and how receptive lenders will be to processing applications quickly and without the level of checks that have been evident for other schemes.
It will also be interesting to see how the system can cope with the number of applications anticipated.
If you need further advice on this – or any of the other financial measures in place at this time – contact us today.