Small businesses will be eligible for new loans worth between £2,000 and £50,000, which are backed by a 100% government guarantee.
Chancellor Rishi Sunak said the government will pay the interest on these “bounce-back loans” for the first 12 months. The scheme will open from 9am on 4th May and the loans should arrive within 24 hours of approval.
No repayments at all will be payable in the first 12 months. Loan terms will be available up to 6 years.
Are you eligible?
- Based in UK
- Have been negatively affected by Coronavirus
- Your business was not in difficulty on 31st Dec 2019
If you have already claimed under the CBILS (loan scheme) you cannot apply. However, you can ask your lender to transfer your loan to the ‘bounce back’ scheme if you borrowed up to £50k.
The Chancellor added that he would not be yielding to pressure to underwrite with 100% guarantees all the government’s Coronavirus Business Interruption Loans.
“We should not ask the ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums……to businesses who may, in some cases, have very little prospect of paying those loans back – and not necessarily because of the impact of Coronavirus,” he told Parliament.
“So, I do not think it is appropriate to provide 100% guarantees on all of our schemes. Instead, these new Bounce Back Loans carefully target that extraordinary level of state support at those who need it most. And the £50,000 cap balances the risk to the taxpayer with the need to support our smallest businesses.”
Read the Chancellor’s statement in full here.
TOP-UP TO LOCAL BUSINESS GRANT FUNDS SCHEME
In addition, a discretionary fund has been set up to accommodate certain small businesses previously outside the scope of the business grant funds scheme. Up to £617 million would be made available. The additional fund is aimed at small businesses with ongoing fixed property-related costs. Local authorities are to prioritise businesses in shared spaces, regular market traders, small charity properties. The allocation of funding will be at the discretion of local authorities.
For more details view here.