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Bounce Back Loan Scheme (BBLS)

How to Apply for the Bounce Back Loan Scheme

11 May 2020

Chris O'Shea | Cash Flow

What is the Bounce Back Loan Scheme (BBLS)?

On 4th May, the UK Government launched the Bounce Back Loan Scheme (BBLS). This scheme is an attempt to make it easier for small to medium enterprises to access finance during the Coronavirus pandemic to assist with cash flow

Previously, small businesses were expected to apply for emergency funding under the Coronavirus Business Interruption Loan Scheme (CBILS). However, many businesses are finding it difficult to access the finance on offer. This is largely due to the restrictive eligibility criteria which means businesses need to prove their viability before the pandemic when applying. 

The Bounce Back Loan Scheme has no such restrictions. Businesses only need to self-declare that they meet the scheme’s eligibility criteria. Therefore, businesses are finding it far easier to access emergency finance through the BBLS, even though they can borrow lesser sums than through the CBILS. 

How Much Can I Borrow with the Bounce Back Loan Scheme

The Bounce Back Loan Scheme does have a lower borrowing limit than the Coronavirus Business Interruption Loan Scheme (CBILS). This is due to the less restrictive eligibility criteria. 

Under the BBLS, small to medium enterprises (SMEs) can borrow between £2,000 and up to 25% of their turnover. This upper limit is capped at £50,000, however. 

Additionally, there are no fees and no interest to pay on the loan for the first 12 months of the term. After the first 12 months, the interest rate will be set at 2.5%. 

The full loan term is 6 years. However, you will be able to make early repayments without incurring a charge.

The UK Government will guarantee 100% of the loan, meaning there is less risk to the lender and they are far more likely to agree to the loan. 

Am I Eligible for the Bounce Back Loan Scheme? 

If your business was established before 1st March 2020, is based in the UK and has been negatively impacted by Coronavirus, you are eligible to apply for the Bounce Back Loan Scheme. 

The lenders do not have to assess your business’s viability before the pandemic, as they do with the CBILS, which has been the biggest barrier to accessing finance. 

However, you may not be eligible for the BBLS if your business was classified as a ‘business in difficulty’ on 31st December 2019, or you may face restrictions on your application

Certain industries are also not eligible to apply under this scheme. For instance, banks, insurers, public sector bodies and schools cannot apply. 

What if I Have Already Borrowed Under the CBILS?

If you have already applied and are currently borrowing money under the Coronavirus Business Interruption Loan Scheme (CBILS),  Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the COVID-19 Corporate Financing Facility, you will not be eligible to apply for the Bounce Back Loan Scheme (BBLS).

However, if you have borrowed up to £50,000 under any of these schemes, you can transfer the loan to the Bounce Back Loan Scheme. You will need to arrange this with your lender and it must be done before 4th November 2020. 

How do I Apply for the Bounce Back Loan Scheme? 

Small to Medium Enterprises can access the Bounce Back Loan Scheme directly from the financial lenders. There are currently 11 lenders participating in the scheme, and these include many of the major banks. 

You will be required to fill in some documentation and self-declare that you meet the scheme’s criteria. 

These are the institutions currently participating in the Bounce Back Loan Scheme: 

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