Bounce Back Loan Scheme (BBLS) – Your questions answered

Published by John Walsham on 7 May 2020

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Last updated 7 May 2020

The Bounce Back Loan Scheme (BBLS) is now open for applications and aimed at supporting small and medium enterprises affected by COVID-19 with Government backed loans of up to £50,000. We answer your questions.

Q. How much can I borrow?

The minimum value of a facility provided under the Scheme is £2,000; the maximum is 25% of turnover up to a cap of £50,000.

Q. Am I eligible to apply?

The Scheme is open to most businesses, regardless of turnover, and which were established on or before 1 March 2020. The borrower is required to self-declare they meet the eligibility criteria for the scheme. Lenders do not have to assess a business’ affordability or viability. Lenders are not responsible for the borrower’s decision to borrow.

Q. What type of finance is available under the BBLS?

Accredited lenders are only permitted to provide term loans under the Scheme

Q. What can I use the loan for?

The business must confirm to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, and not for personal purposes. There are no limits on the amount of the facility that can be used for refinancing.

Q. How much does it cost and what are the repayment terms?

Repayment terms are fixed at six years, but there are no early repayment charges. The first 12 months are interest free and the borrower has a 12-month capital repayment holiday. The interest rate for the loan is fixed at 2.5% per annum.

Q. I understand I do not have to provide a personal guarantee?

There is no requirement for a personal guarantee but businesses remain 100% liable to repay the full loan amount, as well as interest, after the first year. No recovery action can be taken over a borrower’s main home or primary personal vehicle.

Q. I understand I do not have to provide a personal guarantee but I am a sole trader/partnership how does this affect my personal liability under BBLS?

For sole traders or partnerships, who do not have the benefit of limited liability, other personal assets may be at risk of recovery action.

Q. When I looked into CBILS I was unable to apply as I was deemed a “business in difficulty” on 31 December 2019. Can I now apply for BBLS?

Yes, but note that a loan under BBLS is not permitted to be used for export-related activities.

Q. I only began trading in Nov 2019.Can I apply for BBLS?

Yes, the Scheme is open to most businesses, regardless of turnover, which meet the eligibility criteria and which were established on or before 1 March 2020. You can only borrow up to 25% of your business turnover up to a maximum of £50,000.

Q. My bank is not listed as a British Business Bank’s accredited lender. What do I do?

At launch on 4th May there were only a limited list of accredited lenders but more will be added in the coming days/weeks.

If your bank is not listed then you should enquire as to whether they plan to join the scheme: if your need is more urgent you can explore funding from one of the accredited lenders via their online application platform. A list of the current accredited lenders is available here.

Do call us on 0330 124 1399, via our enquiry form or speak to your usual Kreston Reeves contact if you would like to discuss any business or financial matters.

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