The ongoing global coronavirus pandemic is proving to be one of the most earth-shattering events in modern history. While many businesses have felt supported by the Government so far, many will be feeling that we are a long way from being back to normality, if such a state even exists.
This morning, the Government added to its already sturdy package of support for business by announcing another option for businesses to apply for. The Bounce Back Loan Scheme offers those who apply anything from £2,000 up to £50,000, with a maximum limit of 25% of turnover. Many SMEs will be seeing the chance to secure their future with such support, which offers affordable and fair ways of borrowing and paying back the funds necessary to see businesses through.
The loan carries no interest for 12 months, then has a 2.5% rate applied, with firms applying online for the loan through their existing bank. Your bank should also offer other business recovery services, so it’s being advised that businesses of all sizes enquire with the bank they have a specific business account with already. There’s nothing stopping you from applying elsewhere, but your process may take longer simply because of registering with a new provider.
If businesses are already receiving the Coronavirus Business Interruption Loan Scheme (CBILS) or are in the application process, then they will not be eligible for this as an additional loan. Businesses will also need to prove they were a viable concern prior to the current lockdown measures, both solvent and as an operating business.
The attractive element of this is that the cost is spread for six years, but carries no repayment charge for early settlement. Those worried that this kind of a loan could cripple them financially will also be welcoming this as lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets, such as their main home or personal vehicle.
Those who default on the Bounce Back Loan Scheme should make the effort to talk to the lender if they are experiencing financial difficulties as they will have standard processes in place to support customers in those circumstances.
As previously stated, lenders are not permitted to require personal guarantees for the Bounce Back Loan Scheme. For sole traders or small partnerships, who often risk their personal assets when borrowing, the favourable terms of the Bounce Back Loan Scheme mean no recovery action can be taken over a principal private residence or a primary personal vehicle.
If these measures are enough remains to be seen, but business has certainly been within the Government’s sights for much of the crisis. The UK economy is adaptive and innovative, which in the long run will mean that recovery will be possible, just on a currently unknown timescale.