Chancellor Rishi Sunak announced that bounce back loans for micro-businesses will be available from Monday 4th May 2020. These will be 100% government-backed and will be for up to £50,000, or 25% of your turnover ...
- available to the smallest limited companies and the self-employed
- businesses will be able to borrow between £2,000 and £50,000 and access the cash within days
- loans will be interest-free for the first 12 months
- businesses can apply online through a short and simple form
- the money should be available within a few days of application
- individuals can self-certify the information but lenders may want to see a tax return
- only businesses that existed on 1st March 2020 are eligible to apply
- loan terms will be up to six years
You can apply for a loan if your business is based in the United Kingdom, has been negatively affected by Coronavirus and was not 'undertaking in difficulty' on 31st December 2019.
The scheme ensures that even the smallest firms can get a vital cash injection to help them continue operating and get access to that finance in just a few days. Rishi Sunak said, "Our smallest businesses are the backbone of our economy and play a vital role in their communities. These new bounce back loans will help ensure they get the finance they need quickly to help survive this crisis. This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses."
Because of the Government's 100% guarantee, banks will not have to absorb any risk on the loans so should make it far easier to qualify. If a business cannot repay and the funds cannot be recouped through normal channels, the state will take the loss, not the bank.
However, the Treasury has said it is ensuring that the primary homes and vehicles of sole traders (who are still businesses but not legally incorporated) are protected from debt collectors in the event they can't repay the loan!
And the last bit of good news for anyone thinking of applying for one of these bounce back loans is that there is no interest to pay for the first year, just normal capital monthly repayments.
This is a very positive announcement from the Government and the 100% guarantee is going to make applying and qualifying for a bounce back loan a straightforward task for the vast majority of self-employed and micro businesses.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.