New 100% government backed loan scheme for small businesses
The new Bounce Back Loans scheme, announced by the Chancellor today, will allow businesses to borrow between £2,000 and £50,000 and access the cash within days. Loans will be interest free for the first 12 months, and from Monday 4 May, businesses can apply online through a short and simple form.
The Government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.
The loans will be easy to apply for through a short, standardised online application. Loans should reach businesses within days – providing immediate support to those that need it as easily as possible.
Applications for the Scheme are now live. Applicants are advised to visit the website of their business banking provider.
Mr Sunak told the House of Commons that the new micro-loan scheme is designed to help small businesses struggling to access credit during the current lockdown.
“I know that some small businesses are still struggling to access credit. If we want to benefit from their dynamism and entrepreneurial spirit as we recover our economy, they will need extra support to get through this crisis.”
Available from 9am next Monday, the loans will not be subject to business liability tests or complex eligibility criteria, he said.
Describing them as ‘a simple, quick, easy solution for those in need of smaller loans’, Mr Sunak said that most eligible firms will be able to access them by filling out a standard form, with funds available within 24 hours of approval.
Firms will be able to access these loans through a network of accredited lenders. The government will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and agree a low standardised level of interest for the remaining period of the loan.
The new scheme will run alongside the existing Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS).
The Government is also taking additional steps on the Coronavirus Business Interruption Loan Scheme (CBILS) to ensure that lenders have the confidence they need to process finance applications quickly, including removing the per lender portfolio cap for the government guarantee, and changing the viability tests that so that all banks will need to assess is whether a business was viable pre COVID-19.