The Government has announced a loan scheme to help small and medium-sized businesses affected by coronavirus (COVID-19) to apply for loans of up to £50,000. It will be open for applications on 4th May 2020.
Unlike the Business Coronavirus Interruption Loan Scheme, the Government will guarantee 100% of the loan and there will be a 12 month holiday from fees or interest.
The loans will be over a max period of 6 years and critically for many small businesses, no repayments will be due during the first 12 months. There are still a few details to be worked out but the government has stated it will work with lenders to agree a low rate of interest for the remaining period of the loan.
The scheme will be delivered through a network of accredited lenders but this is expected to be those that are eligible as accredited lenders through the UK Business Bank.
To apply a business must be based in the UK, it must be able to show it has been negatively affected by coronavirus and it must be able to show it was not an ‘undertaking in difficulty’ on 31 December 2019.
“an undertaking in difficulty” is defined in EU Regulations relating to state aid compliance within the internal markets. For Ltd companies established over 3 years, sustained losses exceeding share capital, entering into insolvency proceedings or previous receipt of rescue funds would qualify the SME as an “undertaking in difficulty”. If your business qualified as an “undertaking in difficulty” at the end of 2019, it is unlikely that the Government Covid 19 Bounce Back Loan will be available to your business.
Businesses that have already been approved under the Business Coronavirus Interruption Loan Scheme for a loan under £50k can arrange to transfer this back into the Bounce Back Loan Scheme directly with their lender until the 4th November 2020.
If a business has already been approved for a loan over £50k through the Business Coronavirus Interruption Loan Scheme, it cannot apply for the Bounce Back Loan Scheme.