Updated 4th June 2020

On Monday 4th May, the application process for applying for the new ‘bounce back’ loans opened. Since then, over £21bn has been lent to business by UK lenders.

These loans apply to UK sole traders, partnerships, Limited Liability Partnerships and Limited companies of any size. If you have a group of companies, each of these can apply separately.

Terms you need to meet to be eligible: 

  • Business can demonstrate it has been negatively affected by coronavirus
  • You were not in difficulty at 31st December 2019 (this means that you were solvent at this date and able to meet your debts as they fall due)
  • You were trading at 1st March 2019
  • Businesses can borrow up to 25% turnover or maximum of £50,000 (minimum of £2,000)
  • Access to this cash 2 days of successful application
  • 100% government backed so no risk to the lender
  • Interest free for 12 months
  • Repayment free for 12 months
  • 6-year loan term
  • Post 12-month interest rate was still being debated between government and banks at the time of press (they expect it to be low – between 2-5 % per annum)
  • No arrangement fees or early repayment penalties
  • Simple online application of up to 1 page
  • Cannot apply if you’ve already been paid out for a Coronavirus Business Interruption Loan Scheme (CBILS) loan but you can ask you CBILS lender to reclass part of your CBILS loan as bounce back up until November 2020.
  • Not open to organisations that are primarily funded by government and a few others (e.g. education, insurers, banks etc.), but insurance brokers can apply.

What information do I need to supply?

  • Evidence or overview of how you were negatively affected
  • Financial accounts up to 31st December 2019 or Management information from start of new year to 31st December 2019 showing you were solvent and viable at 31st December 2019

NB – If you can prove turnover was increased in March 2020 quarter or after you may want to supply management information or bank statements to help maximise the lending value

It is not expected that you will need to supply any kind of cashflow forecast.

Why might I look to refinance part of my CBILS lending to bounce back?

  • This may offer better terms e.g. Interest rates
  • Your bank or lender may want you to which would decrease their exposure due to the government covering 100% exposure

My balance sheet is insolvent what can I do?

  • If this is because of money owed to you as director, you can recapitalise as shares to bring you to a positive position BUT you won’t be able to draw this back until you exit the business. Alternatively, you may prefer to look at other finance.

What will it cost me overall?

  • You can borrow a maximum of £50,000 over a 6-year period with no interest or repayments for first 12 months
  • At 2.5% interest your repayments would be £1,095 per month with overall interest of £2,560.

Before signing up to any lending you should always know the overall cost to you and any early repayment penalties should you wish to repay early or re-finance for a larger amount.

Talk to your Principal Adviser at A4G or call us on 01474 853 856 or email discovery@a4g-llp.co.uk to make sure applying for bounce back lending is the right path for your long-term plans or if this won’t be an available option for you what other steps you can take.

Contact me today!

Emma White

FCA

Partner

01474 853856

Send me a message

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