Small businesses can now apply for quick and easy to access loans of up to £50,000, with the cash expected to be available within days. This is an interest and repayment free loan for a year. The Bounce Back Loan Scheme closes for any new applications on Wednesday 4th November 2020.
The scheme has been introduced to help small and medium-sized businesses affected by coronavirus (COVID-19) to borrow between £2,000 to £50,000. The government guarantees 100% of the loan and there are no fees or interest to pay for the first 12 months with a low interest rate of 2.5% thereafter.
Thousands of small firms and sole traders – including high street staples like hairdressers, coffee shops and florists – will be eligible for 100% government-backed Bounce Back Loans to help them make it through the Covid-19 outbreak. To be eligible for the loan your business must be based in the UK and have been negatively affected by Covid-19.
Loan terms will be up to 6 years and no repayments are due during the first 12 months. While you cannot apply for both this loan and a Coronavirus Business Interruption loan, if your business has already taken out a Coronavirus Business Interruption Loan of £50,000 or less you can apply to have this switched over to this generous new scheme. This can be arranged with your lender right up until the closing date on Wednesday 4 November 2020.
If you need the money and are comfortable borrowing money then this is a welcome lifeline. If you are unsure if you need the money but are confident that you can manage money, then generally it may still be a good idea to borrow this money and set it aside as an emergency fund. If in 12 months you did not need to use it you can repay it or else use it to pay off an existing more expensive loan, which will aid your cash flow for the remaining term of the loan.
Remember this is a loan, not a grant and the 100% Government Guarantee is to the bank; if the bank fails to get the money back from you, you (or your company where you trade as a Limited Company) will still be liable for repaying the amount of the loan.
On the British Business Bank website you can find a list of British Business Bank accredited lenders operating in Northern Ireland, if you click on their logo it will take you to their websites where you can apply online.
Disclaimer: You should only enter into a loan where you are satisfied that you will be able to repay the loan. The advice herein is generic and you should take specific advice before entering into any new loan agreements.