In an attempt to help businesses that were unable to access funds through the Coronavirus Business Interruption Loans (CBILS), the treasury recently announced the Bounce Back Loan Scheme (BBLS).
The terms of these loans have now been confirmed as follows:
- Loans range from £2,000 up to 25% of a business’ turnover to a maximum of £50,000
- 100% Government backed loan with no other security required
- The loans are for a period of six years
- There are no interest charges or repayments due in the first year
- A low interest rate of 2.5%
- No early repayment charges
- No arrangement fees
To be eligible for the BBLS, in general terms, you need to be a business in the UK, have been affected by Coronavirus and not using CBILS.
Why consider taking out a Bounce Back Loan?
- Cash flow
A Bounce Back loan would provide cheap working capital for your business.
- Repayment of existing borrowings
Perhaps consider whether you have any current business borrowings such as hire purchase agreements, bank loans and overdrafts or credit card debt that could be settled by using the funds raised from a Bounce Back loan. It would be important to check that there are no early repayment charges on existing agreements before doing this.
- Funding of capital expenditure
If you are considering investing in new equipment for your business, a BBLS loan could be a more attractive alternative to traditional business borrowing options.
Although at the time of writing it has not been announced how long the BBLS or CBILS will be available, it is unlikely that it will be indefinitely and therefore it is sensible to consider this sooner rather than later.
You can find more details on the Bounce Back loans and indeed the larger Coronavirus Business Interruption Loans on the British Bank Website.
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