COVID-19 has hit the pockets of individuals and businesses across the world. Fortunately in the UK, there have been a number of schemes designed to support these people, in a bid to get preserve jobs and businesses, and to encourage the economy to grow.
One of the schemes is the Coronavirus Bounce Back Loan Scheme (BBLS).More than one million Bounce Back loans have already been approved, totalling to more than £30.9 billion.
Who can apply for the BBLS?
The BBLS was launched after it was claimed that the Coronavirus Business Interruption Loan Scheme was inaccessible for small businesses.
The scheme is open to businesses that meet the following criteria:
- The business must be based in the UK
- The business must have been trading before 1 March 2020
- The business has been adversely affected by the impact of COVID-19
Businesses should note that there may be certain restrictions if the business was classed as being ‘in difficulty’ as at 31 December 2019. This will mean that they must demonstrate that they were complying with additional state aid restrictions.
There are a number of industries which are exempt from applying for the BBLS. They are:
- Banks, insurers and reinsurers (although this does not include insurance brokers)
- Public-sector bodies
- Primary and secondary schools that are state-funded
Furthermore, the government has provided many schemes in order to protect individuals and businesses in light of the coronavirus pandemic.
Any businesses that have claimed the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the COVID-19 Corporate Financing Facility will not be eligible for the BBLS.
If a loan of up to £50,000 has been granted by one of the three above schemes, it can be transferred to the BBLS by 4 November 2020. This will need to be arranged with the lender.
The scheme is open until 4 November 2020, but the government may extend it beyond this date, depending on the COVID-19 situation nearer the time.
How long is the loan for?
The loan is for a period of up to six years, although it can be repaid earlier without any fees being applicable.
What are the main terms and conditions of the BBLS?
The loan is 100% guaranteed by the government, and in the first year, there is no interest to be paid.
After the first 12 months, the interest rate that will be charged on the loan will be at 2.5% per annum.
The scheme is available to small and medium-sized businesses, and allows them to borrow between £2,000 and 25% of their annual turnover, up to a maximum of £50,000.
As previously mentioned, if the business wishes to pay the BBLS loan back earlier than the original term, there are no fees for early repayment.
And, it is expected that a decision will be made within one or two working days (depending on demand), with a further day to wait for the funds to be deposited in to the nominated bank account.
Where to apply for the BBLS
There are more than 20 lenders that are currently offering the BBLS, including many of the main high street banks.
The lenders that are offering the BBLS and should be approached by the business via their website. On their website, businesses will be required to fill in a short online application form, and declare the eligibility of the business to claim for the BBLS.
Once the application has been submitted, the lender will decide whether or not they will offer the loan to the business, or if a separate type of finance would be more appropriate. The business will be responsible for paying the full amount borrowed.
If the lender rejects your application
If one lender rejects your application, the business can still apply to another of the lenders that are eligible to grant the BBLS to businesses.
However, the likelihood is that if a business has been rejected by one lender, it is likely to be rejected by others. It is therefore worth investigating the reason why and seeking professional financial advice to see if the reasons for it can be corrected, or if there are alternative forms of finance that are more suited to assist in ensuring the long-term future of the business.
Concluding thoughts
Whether it be for investment in systems to help with social distancing, such as a booking system, or for safety equipment, such as partitioning and signage, the BBLS could be an opportunity for businesses to access funding from the government to help them navigate through these unprecedented times.
With no repayments or interest incurred during the first 12 months, it provides a perfect opportunity to make changes to adapt to the new ways of living and working following the coronavirus pandemic.
It is strongly advised to consult with qualified financial professionals, such as accountants or financial advisers, to ensure that the business is accessing the most appropriate forms of financing to meet its needs, and to give itself the best opportunity of successfully securing this funding.
The qualified and experienced staff at An Accounting Gem can help you and your business navigate through the current crisis – advising you on the best types of finance available to you as well as being there for any accounting advice you need.
Please call us on 01473 744 700 or email us at contactus@aag-accountants.co.uk to find out more.
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