From today (Monday 04 May 2020), accredited lenders are accepting applications for the new Bounce Back Loan (BBL) Scheme, which was introduced by the UK Chancellor on 27 April 2020.
The Scheme aims to support smaller businesses by providing them with quick access to loan facilities based on the following terms:
- Up to £50,000 loan: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
- 100% guarantee: The Scheme provides the lender with a government-backed, 100% guarantee against the outstanding facility balance, both capital and interest (with the borrower always remains 100% liable for the debt).
- Interest rate: The government has set the interest rate for all facilities under the Scheme at 2.5% per annum.
- Interest paid by government for 12 months: The government will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs.
- No principal repayments for first 12 months: Borrowers will not have to begin principal repayments for the first 12 months, thereafter capital will be repaid on a straight line basis.
- Finance terms: The length of the loan is for six years but early repayment is allowed, without early repayment fees.
- No personal guarantees: No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle.
A list of accredited lenders can be found on the British Business Bank website.