On Monday 27 April Chancellor Rishi Sunak announced a relaxation to Coronavirus Business Interruption Loan Scheme (CBILS) conditions which he termed the new ‘Bounce Back Loans Scheme’ (BBLS). This aim is to provide loans of up to £50,000, to help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic. The loan will be simple to apply for, requiring only a two-page self-certification form online, in line with similar 100% schemes provided in a few other countries, notably Switzerland. It aims to unlock a backlog of loan applications being delayed by credit checks by banks who have been overwhelmed amid fears many small firms could fold before getting to the loans which are currently available.
Small businesses will be able to borrow between £2,000 and £50,000 and access the cash ‘within days’. The loan terms mean that no capital or interest repayments will be due for one year. Instead, the government says it will pay the interest for the first 12 months. The government will provide lenders with a 100% guarantee for the loans. The scheme will launch for applications on Monday 4 May. Firms will be able to access these loans through the existing a network of ‘accredited’ lenders administered by the British Business Bank.
This level of support could make a difference to many smaller businesses whose ability to withstand the current demand shock represented by the government’s response to COVID-19, is measured in days and weeks rather than months. Detail is hard to come at this early stage but one possible definition of a micro-business could be businesses with fewer than ten employees and either a turnover of up to €2 million or a balance sheet total of up to €2 million.
The existing CBILS scheme has been well intentioned but the human element of lending procedure, considering business viability and risk made it slow to provide funds at the necessary scale to make the difference for many of its applicants. It is to be hoped that the simplified and the increased digital approach of the Bounce Back scheme makes it more successful in achieving its aims.
At Crowe we can help you maximise the support available to you and guide you through the application process. To discuss your individual circumstances please contact your usual Crowe contact.
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