COVID-19: Bounce Back Loans Announced
Available from 4th May 2020 ...
POSTED BY ROGER EDDOWES ON 30/04/2020 @ 8:00AM
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 ...
The new bounce back loans of a 100% Government guarantee and have no interest for the first 12 months!
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I feel that this is excellent news as there are so many self-employed people, new directors and other freelancers who have fallen through the gaps in the Government's mainstream Coronavirus support schemes.
The main highlights from the announcement are that:
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.
"Following that, the Government will ensure that the
interest rate will be very low!"
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.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about these new bounce back loans for micro businesses and the self-employed, call me on 01908 774320, leave a comment below or click here to ping over an email and let's see how the Business Godparent can help you.
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About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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