Small businesses to benefit from “Bounce-back loans”
28 April 2020
The Chancellor announced a new loan scheme for smaller businesses that will benefit from a 100% government-backed guarantee.
The initial details announced are summarised below:
- Businesses can apply for loans between £2,000 and £50,000 but will be limited to loans not exceeding 25% of turnover.
- Access to cash, following a successful application, should be made available within days.
- Government will step in and repay the loan (100% guarantee) if the company is unable to meet its loan obligations.
- Application will be a simple online form.
- Loans will be interest free for the first twelve months and government will cover any other fees associated with the loan set-up.
- No loan repayments will be required for the first year.
- The scheme will launch for applications on Monday 4th May 2020.
- The government will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and will further agree a low standardised level of interest for the remaining period of the loan.
If banks and the government can meet these terms this would appear to be the best of the bank loan solutions to date that target support for small businesses affected by the coronavirus disruption.