Bounce Back Loan Scheme (BBLS) – Your questions answered – scheme now closed

The Coronavirus Business Interruption Loan Scheme is now closed. You can find out more about the replacement Recovery Loan Scheme here. The article below should only be used for archival or research purposes.

The Bounce Back Loan Scheme (BBLS) is now open for applications and aimed at supporting small and medium enterprises affected by COVID-19 with Government backed loans of up to £50,000. We answer your questions.

Q. How much can I borrow?

The minimum value of a facility provided under the Scheme is £2,000; the maximum is 25% of turnover up to a cap of £50,000.

Q. Am I eligible to apply?

The Scheme is open to most businesses, regardless of turnover, and which were established on or before 1 March 2020. The borrower is required to self-declare they meet the eligibility criteria for the scheme. Lenders do not have to assess a business’ affordability or viability. Lenders are not responsible for the borrower’s decision to borrow.

Q. What type of finance is available under the BBLS?

Accredited lenders are only permitted to provide term loans under the Scheme

Q. What can I use the loan for?

The business must confirm to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, and not for personal purposes. There are no limits on the amount of the facility that can be used for refinancing.

Q. How much does it cost and what are the repayment terms?

Repayment terms are initially fixed at six years with the first 12 months being interest free and the borrower has a 12-month capital repayment holiday. The interest rate for the loan is fixed at 2.5% per annum. Following a government announcement on 8^th Feb 2021, lenders will proactively inform their customers of ‘Pay as You Grow’, but borrowers should only expect correspondence three months before their first capital repayments are due. It will provide businesses with the following options:

• Extend the length of the original loan from six years to ten
• Make interest-only payments for a further six months, with the option to use this up to three times throughout the loan
• Pause repayments entirely for up to six months

Q. I understand I do not have to provide a personal guarantee?

There is no requirement for a personal guarantee but businesses remain 100% liable to repay the full loan amount, as well as interest, after the first year. No recovery action can be taken over a borrower’s main home or primary personal vehicle.

Q. I understand I do not have to provide a personal guarantee but I am a sole trader/partnership how does this affect my personal liability under BBLS?

For sole traders or partnerships, who do not have the benefit of limited liability, other personal assets may be at risk of recovery action.

Q. I thought that the loan term for BBLS had been extended to 10 years but I’m being told it is only 6 years?

Prior to your first repayment being due (12 months after drawdown of your original loan) the lender will offer you the opportunity extend your loan to 10 years plus some other opportunities to ease the burden of the repayments. Find out more here.

Q. When I looked into CBILS I was unable to apply as I was deemed a “business in difficulty” on 31 December 2019. Can I now apply for BBLS?

Yes, but note that a loan under BBLS is not permitted to be used for export-related activities.

Q. I originally borrowed £20,000 via BBLS but this further lockdown means I need additional support. Can I apply for more money?

From the 10 November 2020 businesses that originally took a Bounce Back Loan can apply for a ‘top-up’ if they originally borrowed less than the maximum amount available to them. Find out more here.

Q. I only began trading in Nov 2019. Can I apply for BBLS?

Yes, the Scheme is open to most businesses, regardless of turnover, which meet the eligibility criteria and which were established on or before 1 March 2020. You can only borrow up to 25% of your business turnover up to a maximum of £50,000.

Q. When does the BBLS close to applications?

The BBLS deadline has been extended to 31 March 2021 but check with your lender that they are still participating in the scheme.

Q. My bank is not listed as a British Business Bank’s accredited lender. What do I do?

If your bank is not listed then you should enquire as to whether they plan to join the scheme: if your need is more urgent you can explore funding from one of the accredited lenders via their online application platform. A list of the current accredited lenders is available here.

Do call us on 0330 124 1399, via our enquiry form or speak to your usual Kreston Reeves contact if you would like to discuss any business or financial matters.