4 May 2020

Last week, the Chancellor announced the latest measure to support businesses affected by COVID-19 – the Bounce Back Loan Scheme (BBLS).

This scheme was announced in addition to the already live Coronavirus Business Interruption Loan Scheme (CBILS) but aimed at small businesses looking for loans quickly. 

CBILS has had its critics since it launched in April, with many calling for 100% backed loans rather than the 80% on offer with CBILS. However, a balance needed to be found to counter irresponsible lending, which resulted in a new scheme announced. 

So, what are these loans, who can apply and what are the main differences between them? 

Coronavirus Business Interruption Loan Scheme (CBILS)

This was announced during the initial phase of the support announcements and we have seen many applications, both accepted but also rejected. 

These are designed for small- to medium-sized businesses who wish to borrow up to £5m. The first year’s interest is covered by the government and most lenders are also offering no capital repayments for 12 months.

The loan is backed with an 80% guarantee by the government, but the majority of lenders are working within strict lending criteria and require significant documentation from businesses to support loan applications. This is causing fairly lengthy delays on responses and a significant amount of rejections.

Bounce Back Loan Scheme (BBLS)

The difficulty small businesses were having accessing CBILS, and large public desire for a 100% backed loan scheme, prompted the government to announce the Bounce Back Loan Scheme. This has been opened out to small businesses who wish to borrow between £2,000 and £50,000. The main criteria are as follows:

  • Businesses can apply for up to 25% of their turnover up to a maximum of £50,000.
  • There is a 100% government backed guarantee against the loan. 
  • The government will make a Business Interruption Payment (BIP) to cover the first 12 months of interest payments. 
  • The borrower will NOT need to make any capital repayments for 12 months. 
  • The interest rate is set at 2.5%.
  • The loan term is six years – however, early repayment is allowed with NO early repayment charges. 
  • Lenders are not permitted to ask for personal guarantees or take recovery action over the borrower’s personal assets. 

The scheme is now live and we have made applications on behalf of clients already with great success and speed. The application takes around 10 minutes to complete and only basic financial data is required. 

In order to apply, you will need to visit your business banking website and have the following information to hand:

  • Business bank account and sort code
  • 2019 turnover figure
  • Name and address of all directors
  • Company name and registration number 
  • Details of any state funding received during 2019

Currently, only HSBC are allowing non-business banking customers to apply by offering a temporary account to draw down funds into and make a one-off payment to your main business account. As of writing this article, we are awaiting the exact details of this from HSBC.

We have compiled a list of all the main lenders and their application links below:

HSBC – https://www.cbil.business.hsbc.co.uk/bbls/6791eb14-173e-4010-86b6-a8fcb1eeeeda

Santander – https://update-details.santander.co.uk/coronavirus/cbilsubl

NatWest – https://www.business.natwest.com/business/support-centre/service-status/coronavirus/bounce-back-loan.html

Barclays – https://www.barclays.co.uk/business-banking/borrow/bounce-back-loan-scheme/

Lloyds Bank – https://www.lloydsbank.com/business/coronavirus/bbls.html?WT.ac=lloyds-bb-covid_19-gov_scheme-tile-FOM-bbls_homepage

Royal Bank of Scotland – https://www.business.rbs.co.uk/business/support-centre/service-status/coronavirus/bounce-back-loan.html

Starling – https://www.starlingbank.com/business-account/business-bounce-back-loan-scheme/

Want more advice?

We’ve put together articles on a wide number of items announced as part of the Chancellor’s support package – visit our Coronavirus hub to get all the latest details.

Coronavirus hub

How can we help?

If you’re unsure about any of the latest measures announced by the government, or need help applying for any of the schemes, we’re here to help! To arrange a call, email Julie on julie@nephosaccountants.co or complete our enquiry form. 

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