Everything you need to know about the new Bounce Back Loan scheme for businesses

Everything you need to know about the new Bounce Back Loan scheme for businesses

The Coronavirus pandemic has affected each one of us, in one way or another. The last couple of months have been especially tough on the small businesses across the UK, who are struggling to survive. Luckily, though, the UK Government recognises the importance of small businesses and keeps introducing new ways to help. 

There are already a number of Government financial support options available for small businesses, including the business grants and the Coronavirus Business Interruption Loan Scheme (CBILS). However, the new Bounce Back Loan, launching on 4th of May, will likely be the preferable option for you — here’s everything you need to know about it. 


What is the Bounce Back Loan?

The Bounce Back Loan is a new type of Coronavirus loan for small businesses and sole traders. It launched on the 4th of May and will provide loans of up to 25% of your annual turnover (a maximum amount of £50,000). The loan also offers a capital repayment holiday as well as no fees or interest for the first 12 months. Although compared to the Business Interruption Loan Scheme the maximum loan amount is considerably lower, the Bounce Back Loan has a lot of advantages. For example, this loan is 100% Government backed as opposed to the 80% that Coronavirus Business Interruption Loan offers. This means that if your business is struggling, the government will fully cover your repayments, which is a better safety net than with most loans. This is especially good news for the self-employed people who are not eligible for the grant but do not want to take out a risky loan.

Additionally, the Bounce Back Loan is billed as a “fast-tracked” lending option for smaller businesses. This is because it will be a lot easier and quicker to apply for. You can do it through a simple online form and potentially get your funds within 24 hours of a successful application. You are more likely to be accepted for the Bounce Back Loan as well, so if you didn’t succeed with the Coronavirus Business Interruption loan, you have a good chance with this one. 

What’s the difference between the two Coronavirus loans?

The Coronavirus Business Interruption Loan and the Bounce Back Loan are the only two Government backed loan options for small and medium-sized businesses. The table below illustrates the main differences between the two, so you can make a better informed decision of what is right for your business. 

 

Bounce Back Loan

Coronavirus Business Interruption Loan

Launched

4th of May, 2020

23rd of March, 2020

Loan amount

25% of annual turnover (maximum of £50,000)

Up to £5 million

Loan term

Up to 6 years

Up to 6 years

Interest fees

None for the first 12 months

None for the first 12 months

Capital repayments

None for the first 12 months

None for the first 12 months

Safety net

100% Government backed

80% Government Backed

Eligibility

  • Criteria:

    asfb-favicon2-transp Business based in the UK

asfb-favicon2-transp Has been negatively affected by Coronavirus

  • asfb-favicon2-transp Was not an “undertaking in difficulty” on 31st December, 2019

Criteria:

  • asfb-favicon2-transp Business based in the UK

  • asfb-favicon2-transp Has annual turnover of up to £45 million

  • asfb-favicon2-transp Business would be viable were it not for the pandemic

  • asfb-favicon2-transp Has been adversely impacted by Coronavirus

  • asfb-favicon2-transp Wasn’t classed as a “business in difficulty” on 31st December, 2019 (if borrowing more than £30,000)

Application process

Easy - a short and simple online form

Just seven questions

Harder - will have to provide a plan on what the money will be used for. Also, additional documents needed, such as cash flow forecasts, business plans, details of assets, etc. 

Process speed

Within 24 hours of successful application

May take a couple of weeks 

Better suited for

Smaller businesses or self-employed people who need a micro-loan

Larger businesses (turnover up to £45 million) who need a larger loan

 
Can I get both loans?

The short answer is no, you can only get one or the other. However, if you already have the Coronavirus Business Interruption Loan, but you feel like the new Bounce Back Loan is more suited to your business, there’s some good news for you. If you borrowed £50,000 or less, you can switch to the Bounce Back Loan simply by contacting your lender. Keep in mind that the deadline for this is 4th of November, 2020

We’ve teamed up with Swoop to make the application process for Coronavirus loans easier

The Government announced over 40 approved lenders who you can apply with for one of the Coronavirus loans. The high number of lenders could mean that you have a higher chance of approval, but it also means that you will have to spend a long time researching each and every of them. The fact that the eligibility criteria can differ from lender to lender is not helpful either and can quickly become confusing. We are perfectly aware that you don’t have time for that. So, to make the application process easier for you, we teamed up with Swoop

What is Swoop?

swoopSwoop is an online platform that simplifies and speeds-up access to financing for business across the UK & Ireland. From loans and grants to equity funding for businesses, Swoop has thousands of financing providers that you can be matched with based on your eligibility. These include angel investors, mainstream banks, venture capital funds, SEIS/EIS funds and grant agencies. 

Swoop matching technology helps you find the right funding solution for your business while also helping to easily make savings. It doesn’t stop here though, Swoop will guide you through the whole application process by providing you with support and other tools that will make applying for funding that much easier and speedier. Throughout your application, you will be able to track your progress as well as contact one of the friendly customer support members for help. 

How does it work?

Getting started with Swoop is easy - all you need to do is sign up for free with a quick and straightforward form. You will have to enter some basic details about your business or connect to your accounting software. Within seconds, you will be matched with a number of lenders and will be guided throughout the whole application process. 

Both of the Coronavirus loans, the Bounce Back Loan and the Coronavirus Business Interruption Loan, are now available on Swoop, so you can apply to whichever one suits you best. 

Need more help?

If you are still unsure which loan option (or any other financing solution) is right for your business, we are here to help. At ASfB we specialise in consulting businesses of all sizes and supporting them throughout these challenging times. We will work with you to find the solutions that are best suited to your business and needs. 

So why not get in touch for an informal chat and see if we can help your business grow and succeed? You can call us on 01202 755600 or email hello@asfb.co.uk.