The recently launched Bounce Back Loan Scheme (BBLS) allows small and medium-sized businesses to borrow between £2,000 and £50,000 to help them get through the coronavirus pandemic. Loans are government-backed and interest-free for the first 12 months, followed by a flat 2.5% interest rate thereafter

Here are some important facts to know about Bounce Back Loans before you apply:

  • Loans are for up to 25% of a business’s turnover with the maximum amount being £50,000.
  • No fees apply for the first 12 months.
  • No repayments are due for the first 12 months.
  • The maximum loan length is 6 years.
  • Early repayment is possible with no penalties.
  • The Bounce Back Loan Scheme is currently available through 11 lenders, some of which are large high street banks.
  • If you’re already claiming funding, for example, through the Coronavirus Business Interruption Loan Scheme (CBILS), you can transfer it into the Bounce Back Loan Scheme.
  • Bounce Back Loans aren’t subject to all of the usual consumer protections that typically apply to business lending of under £25,000.

Eligibility criteria for the Bounce Back Loan Scheme

Your business must have been adversely affected by the pandemic to be eligible. UK businesses across most sectors can apply, except for public sector organisations, state-funded schools, banks, insurers and reinsurers.

Businesses must have been established before 1st March 2020 and not be currently going through bankruptcy, liquidation, or debt restructuring. If your business was classed as a ‘business in difficulty’ on 31st December 2019, you’ll need to confirm that you’re complying with state aid restrictions.

You can’t apply for a Bounce Back Loan if you’re already using one of the other funding methods, such as the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, or the COVID-19 Corporate Financing Facility. But you may be able to switch your existing funding into the Bounce Back Loan Scheme.

The above isn’t an exhaustive list; there may be other eligibility factors – these FAQs may help further.

How to apply for a Bounce Back Loan

Step 1 – find a lender

Firstly, choose a lender that you want to approach out of the ones listed on the British Business Bank website. The British Business Bank recommends that you should approach your own banking provider in the first instance, before contacting other lenders.

Step 2 – apply directly to the lender

You should go through the lender’s website to apply for a Bounce Back Loan. The process involves filling in a short online application, during which you’ll self-certify that your business meets the required eligibility criteria. Your business, if eligible, will be subject to certain fraud and anti-money laundering checks.

Information you’ll need to have to hand when applying:

  • Company details: address, email address, phone number and company registration number (if applicable).
  • Business turnover for 2019 (estimated or actual).
  • Your business current account and sort code.
  • You may also need your 2018/2019 self-assessment tax return.

Step 3 – you’ll get a decision

The lender will then decide whether to offer you finance. This should happen within a matter of days. If your application is rejected for some reason, you can still approach other lenders accredited with the Bounce Back Loan Scheme.

Low-cost business finance

If your small or medium-sized business is affected by coronavirus, the Bounce Back Loan Scheme presents an extremely cost-effective way to get business finance during these unprecedented times. The information outlined here should help you check whether your business is eligible and give you an idea of what to expect when applying.