Hints & Tips, News
After going live last Monday, the new Government backed Bounce Back loan has proven to be a welcome short-term solution for many UK businesses.
More than 130,000 applications were submitted in the first day with nearly 70,000 Bounce Back loans worth £2bn approved during the first 24 hours.
Whilst this isn’t an area of finance that CAVA can access on your behalf, we are still committed to sharing vital information with our clients that may help them to survive during this time.
What does this loan involve?
Up till now, the Government hadn’t offered support to smaller businesses yet had offered assistance via the Coronavirus Business Interruption Loan Scheme (CBILS) which you can read more about here.
The Bounce Back Loan is aimed at companies looking to borrow less, allowing up to £50,000 (capped at 25% of annual turnover) with an interest rate of 2.5%. Just like the CBILS, the interest will be paid by the government for the first year and applicants have 6 years to repay.
The loan is available through a range of accredited lenders and partners and is backed by the British Business Bank as part of Government support for UK businesses and employees. When looking into this for your business, please be aware that it is not available through all banks.
Unlike CBILS, the minimum loan is a lot less, so if your cashflow has been disrupted as a result of Covid19, but you didn’t qualify for CIBLS, this may be a more suitable option to help support your business through this uncertain time.
Key Points
– Short application form which checks eligibility
– Borrow between £2000 – £50,000
– Borrowing is capped at 25% of business turnover
– Six-year terms
– 100% Government backed guarantee against capita repayments and interest for the first 12 months
– No fees for the first 12 months
– Interest rate set at 2.5% p/a
– Early repayment is allowed with no early repayment fees
– You will not be required to take a personal guarantee (such as your home or vehicle)
How do you apply?
Firstly you should approach a lender, you can view available accredited lenders here across the UK. You should start with your existing bank and an apply via their website. Of course, more lenders may be added to the list in the coming days and weeks.
There are of course certain criteria your business must meet to be eligible and if you are your application will be subject to standard checks.
Be aware that since this scheme has been announced, a high volume of people are making applications which could mean lenders websites or phone lines may be busier than usual, expect delays and be patient.
As with all announcements currently, there will likely be further information announced around the loans in the coming days and we will update this article accordingly.
You can view the FAQs on the British Business Bank website. If you have any other queries relating to topics around future finance for vehicles or assets, please don’t hesitate to get in touch, CAVA Finance remains fully operational and here to help!