COVID-19 and the subsequent lockdown has undoubtedly hit business across most industries hard. Some companies have had to close their doors entirely, while others work with reduced operations and a skeleton staff.
In the face of the crisis, the government was quick to present a range of assistance programmes designed to keep companies and the economy afloat through the crisis period. The government’s response has been both criticised and praised by the business community, with some claiming that they have been unfairly treated compared to other businesses.
One of the more widely accessible and most recent additions to the support available is the Bounce Back Loan Scheme (BBLS). Devised alongside the British Business Bank, the scheme is designed to help companies access credit more quickly during the outbreak period, on favourable and attractive terms for most. Businesses affected by the COVID-19 pandemic can access up to £50,000, through a government-backed loan provided by many national lenders.
How The New BBLS Works
Right now, there is a lot of confusion around the different assistance on offer from the government and other organisations. Companies can already access money, for instance, to pay furloughed staff. But the BBLS is in addition to existing support packages.
The workings of the new BBLS are relatively straightforward. Qualifying companies can apply to the British Business Bank or its accredited partners for finance to keep their operations ticking over through the peak of the coronavirus crisis. They then pay back the money borrowed on generous terms to the original lender, all backed up by government guarantee.
The rules state that businesses can borrow a six-year loan up to 25 per cent of their turnover, up to a maximum of £50,000.
The scheme is made possible by the fact that the government is offering a 100 per cent guarantee on the outstanding balance, including capital and interest. Lenders, therefore, who do not receive repayment from companies can resolve the outstanding balance through the scheme with the government.
Key Features Of the Coronavirus Bounce Back Scheme
The coronavirus BBLS is designed to be as business-friendly as possible, without catastrophically distorting incentives. For that reason, it is quite different from a regular business loan.
Here are some of the critical features of the scheme you need to know:
- Loans range from a minimum of £2,000 to a maximum of £50,000, up to 25 per cent of the borrowing business’s turnover
- The government guarantees 100 per cent of the money issued by the lender
- The borrower remains liable for 100 per cent of the outstanding balance
- The borrower does not have to make any repayments for the first 12 months of the loan
- The interest of the BBLS is fixed at 2.5 per cent – only slightly higher than the rate of inflation
- The government will make business interruption payments, covering the cost of interest on loans for the first twelve months
How To Get Help
If you’re struggling to understand the process, you’re not alone. With lots of conflicting information, many SMEs find themselves in a similar position.
Fortunately, we’re offering free support to help businesses affected by the current crisis. We’ll talk you through the BBLS process and whether this is a suitable solution for your business, as well as discuss any other support that may be available to you. We offer this without charge or obligation, it’s our way of supporting the business community.
Just email us at sayhello@woodvilleaccountancy.co.uk