On Monday Rishi Sunak announced new financial support for small and medium sized businesses affected by coronavirus.
In the latest in our series of COVID-19 Finance FAQs we cover the basics of this simple scheme which are covered here:
1. Who can apply for these loans?
The scheme is available to small and medium-sized businesses that meet certain criteria as outlined in Q3.
2. How and when can I apply?
The scheme launches on Monday 4 May 2020 and you should be able to apply through a short and simple form on your bank’s online banking website.
3. How do I know if I am eligible for a loan?
Your business is eligible if:
- you are based in the UK
- your business has been negatively affected by coronavirus
- and was not ‘an undertaking in difficulty’ on 31 December 2019
You cannot apply if your business is a bank, insurer or reinsurer (but not insurance broker), public sector body or state funded primary or secondary school.
4. What does ‘an undertaking in difficulty’ mean?
As with all the government backed coronavirus financial assistance, the support is aimed at businesses that were viable (i.e. trading successfully rather than already struggling) and would have continued to be so were it not for the coronavirus crisis.
‘Undertaking in difficulty’ is defined in Article 2(18) of the Commission Regulation (EU no. 651/2014 of 17 June 2014. See page 19 at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0651&from=PT for the full definition.
5. How much can I borrow?
The loan scheme will enable eligible businesses to borrow between £2,000 and £50,000.
6. What are the terms of the loans?
The loans can be for up to 6 years and are 100% guaranteed by the government, with no fees or interest payable for the first 12 months and no capital repayments during that period.
The government has also said that it will work with lenders to agree a low rate of interest for these loans.
7. Can I apply if I have already received funding through the Coronavirus Business Interruption Loan Scheme (CBILS)?
No. However, if you have received a loan of up to £50,000 under CBILS then you can arrange with your lender to transfer this to the Bounce Back Loan Scheme, if you do so by 4 November 2020.
Protecting your cashflow is a top priority at current times, remember to checkout our handy tips on this.
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