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The Coronavirus Bounce Back Loan Scheme (BBLS) is the government guaranteed loan scheme to support SMEs. Loans of up to 25% of the business turnover, subject to a minimum loan of £2,000 and a maximum of £50,000 are available for a fixed loan term of 6 years.
BBLS loans are available from 4 May 2020 and the scheme will initially be open until at least 4 November 2020. The government may extend this initial period.
The government will guarantee 100% of the loan and will also meet any bank fees or interest arising in the first 12 months of the loan. All accredited lenders have agreed a flat rate of interest of 2.5% will be charged for the remaining period of the loan. Lenders will not charge any fees other than the fees met by the government at the outset of the loan.
Set out below are those details of the BBLS which have been announced to date and incorporate answers to queries we have received from clients including:
Details of any changes to the BBLS will be included on our website as they become available. Further details of the BBLS and the accredited lenders are available via these links to the British Business Bank and GOV.UK
Which businesses can apply?
All forms of business entity which meet the criteria can make an application under BBLS including:
Certain businesses are not eligible to apply for BBLS:
What are the eligibility criteria?
Businesses must meet all of the following criteria to be eligible to apply for BBLS:
Applicants are required to self-declare they meet the eligibility requirements.
Additional self-declarations are required that the business has not received State Aid of more than £711,200 under the Temporary Framework (lower levels of £106,680 apply to fisheries/aquaculture and £88,900 to agriculture).
An “undertaking in difficulty” is defined by EU Commission Regulations and includes:
An ‘undertaking in difficulty’ may still apply for BBLS subject to meeting further conditions relating to State Aid and acceptance by the lender.
Businesses cannot apply for a BBLS loan if a claim has already been made under the Coronavirus Business Interruption Loan Scheme (CBILS), The Coronavirus Large Business Interruption Loan Scheme or the Covid Corporate Financing Facility. However if a loan has been received under CBILS (or the other coronavirus loan schemes) a BBLS may be obtained provided the proceeds are applied refinance in full the other outstanding coronavirus loan.
How much can I borrow?
BBLS loans are available up to 25% of the business turnover subject to a minimum loan of £2,000 and a maximum loan of £50,000.
Business turnover is that for the year ended 31 December 2019. For those businesses established after 1 January 2019 the turnover is the estimated annual turnover from the date the business started.
BBLS is only available in the form of a loan. BBLS cannot be used to provide asset finance, invoice discounting and overdraft facilities.
Only one BBLS facility can be provided to a business and only one BBLS facility is available within a group of businesses such as a group of companies.
What are the repayment terms?
Loans are available for a fixed loan term of 6 years and no capital repayments will be required for the first twelve months of the BBLS.
Currently lenders are providing examples under BBLS showing equal monthly capital repayments commencing 13 months from the drawdown of the loan up to the end of the fixed term of 72 months.
Lenders are offering different options for the repayment of interest. Some lenders require repayment of the interest each month on the outstanding loan balance, such that the monthly interest charge reduces over the period of the loan. Other lenders have calculated the interest over the life of the loan such that the equal monthly repayment covers both interest and capital.
Under the BBLS the business can elect to repay the loan in whole or in part before the end of the six year loan term without any early charges.
What can I use the money for?
The business is required to confirm to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, paying wages and business expenses or refinancing other business finance facilities.
The refinanced facilities do not have to be coronavirus loans such as the Coronavirus Business Interruption Loan Scheme (CBILS) so a BBLS can be used to replace a current overdraft or business asset finance facility.
BBLS cannot be used for any personal purposes such as paying household bills or refinancing personal credit cards.
How will lenders assess borrowers?
Assessment is predominantly undertaken by the borrower self-certifying their eligibility for the BBLS by responding to questions set out by the lender to confirm the borrower’s eligibility.
As the loan process has been streamlined to ensure rapid availability of the loans, lenders are not required to assess a business’ ability to afford the BBLS loan repayments nor to assess the viability of the business.
The lenders also have no responsibility for the borrower’s decision to borrow under BBLS.
Lenders will be required to complete standard regulatory procedures with respect to fraud, Anti-Money Laundering and Know Your Client checks and these will be undertaken and assessed where the lender is not the business’ current facilities provider.
What lending security will be required?
Lenders are not permitted to take any form of personal guarantee against the loan nor to take action to recover monies due under the BBLS from the borrower’s personal assets, such as their main home or personal vehicle.
Borrowers who do not have limited liability such as sole traders or partnerships may have other personal assets at risk of recovery action.
How do I apply?
Most lenders have set up online application for BBLS to enable loan applications to be processed as rapidly as possible.
Where the business does not have access to enable online application the lender will provide alternative processes which the business can access.
How long before I receive the loan?
Applications submitted to the business’ current facilities provider using online processes should be delivered within a few days of the application being submitted and approved.
Applications undertaken other than online or which are made to lenders which do not have prior knowledge of the business will take longer to be available to drawdown.
BBLS applicants will be subject to standard regulatory procedures undertaken by lenders with respect to fraud, Anti-Money Laundering and Know Your Client checks and completion of these procedures will increase the time taken from application to receipt of an approved loan.
What supporting documents will need to be submitted?
Applications made to the business’ current facilities provider will need to provide details of the business bank account number and sort code.
Where a personal bank account has been used for business transactions the lender may require further documentation such as a copy of a self-assessment tax return.
Applications made to enders which do not have prior knowledge of the business will be subject to standard regulatory procedures undertaken by lenders with respect to fraud, Anti-Money Laundering and Know Your Client checks.
Are there any protections for me as the borrower?
The streamlining of the application process has meant some of the usual protections available under the Consumer Credit Act will not apply to BBLS.
The removed protections are those requiring a lender to provide loan information before the loan is granted and further information throughout the period of the loan agreement and protecting unincorporated businesses in respect of certain recovery actions by the lender.
The BBLS does however require the lender to:
The lender may not charge any lender fees of any description (including on default) or any default interest except interest may continue to be charged at 2.5% per annum until such time as the loan is repaid.
Amanda graduated from Brunel University, with a joint honours degree, achieving a BSC and BA degree in Leisure Management and Television and film studies. Amanda started her career in a customer service role before joining the hotel group Le Meridien as an Events coordinator, she was in the hotel industry for seven years and during her time won an award from a major international airline for her outstanding attitude and dedication to customer service, which she achieved while working for the Rezidor hotel group in the position of Airline Crew Manager. Amanda has over 20 years experience in customer relations and event management.
