Bounce Back Loan Scheme (BBLS) – now closed

The Bounce Bounce Loan Scheme is now closed. You can find out more about the replacement Recovery Loan Scheme here. The article below should only be used for archival or research purposes.

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. The deadline for BBLS has been extended to 31 March 2021. It seems that not all banks are applying the same approach to this extension so please check with your lender that they will continue to participate in this scheme beyond 31 January 2021.

Main Bounce Back Loan Scheme features

• Up to £50,000 loan: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
• 100% guarantee: The scheme provides the lender with a government-backed, full guarantee (100%) against the outstanding facility balance, both capital and interest. The borrower always remains 100% liable for the debt
• Interest rate: The Government has set the interest rate for this facility at 2.5% per annum, meaning businesses will all benefit from the same, low rate of interest.
• Interest paid by Government for 12 months: The Government will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs.
• No principal repayments for first 12 months: Borrowers will not have to begin principal repayments for the first 12 months, thereafter capital will be repaid on a straight-line basis.
• No guarantee fee for businesses or lenders to access the scheme
• Finance terms: The initial term of the loan is for six years but can be extended to ten years in the three months prior to capital repayments becoming due. Early repayment is allowed during the loan period and without early repayment fees.
• No personal guarantees: No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle.

Bounce Back Loan Scheme eligibility criteria

Businesses from all sectors can apply for a facility with few exceptions. The business must self-certify to its lender the following:

• Confirm it is UK-based in its business activity, and established by 1 March 2020
• Confirm it has been adversely impacted by the Coronavirus (COVID-19)
• Confirm it is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility)
• Confirm it is not in bankruptcy, liquidation or undergoing debt restructuring

From the 10 November 2020 businesses that originally took a Bounce Back Loan can apply for a ‘top-up’ if they originally borrowed less than the maximum amount available to them.

How to apply

• Businesses should check the British Business Bank website to find out which lenders provide Bounce Back Loans.
• Businesses will be required to fill in a short online application form on their lender’s website, which self-certifies whether they are eligible for a Bounce Back Loan facility. Eligible companies will be subject to standard customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. Some State aid restrictions may apply to applications.
• A list of BBLS accredited lenders can be found on the British Business Bank website.
• The BBLS deadline has been extended to 31 March 2021 but check with your lender that they are still participating in the scheme.

Read more on our Bounce Back Loan Scheme Q&A article here.

If you would like to discuss eligibility for this loan, do speak with your usual Kreston Reeves contact, or John Walsham.