As businesses across the country grapple with increased lockdown measures, the UK government has announced a range of support measures to help businesses during this difficult time. One of the most talked-about support schemes is the Bounce Back Loan scheme which was designed to allow small businesses to access finance quickly during the pandemic. We take a look at the Bounce Back Loan Scheme and how it could help your business.
What is the Bounce Back Loan Scheme?
The Bounce Back Loan Scheme provides 100% government-backed loans for small businesses and you can borrow between £2000 and £5000. During the first year of the loan, the government will cover any fees or interest. In the first 12 months of the loan, businesses don’t need to pay back anything. After the first year, banks will charge 2.5% annual interest on loans in the Bounce Back Loan Scheme.
How does the application for the scheme work?
Small businesses can apply for the funding online through the government website or via their bank. Business bounce back loans are available from a number of banks (14 at present) and you must have started your business before 1 March 2020. You will need to be able to self-certify and show that your business has been negatively impacted by the pandemic.
Changes to the bounce back loan scheme
The deadline for the Bounce Back Loan Scheme has been extended until 31 March 2021 and since it was announced more than 1.43 million loans have been issued. The government also announced that now business owners can ‘top-up’ their bounce back loans if they haven’t already borrowed the maximum amount. This needs to be from the same bank and the minimum amount you can top up by is £1000. The loans were originally supposed to last for six years but that has recently been increased to ten years. This can allow you to spread the cost of repayments over a longer period but you will end up paying more interest.
Advice on the Bounce Back Loan Scheme
If you need extra support managing your finances during this difficult period, CWR accountants are here to help. From managing payroll to applying for loans, our accounting experts can give you the best advice to make sure your business is secure for the future.