On day 1, the process seems slick and easy, with each bank using the same simple and concise application form. Application is via your business bank’s website and must be completed directly by you, and not a broker. There is no need for a broker to be involved, unless you want to validate the affordability of a loan, as you, the borrower, will be 100% liable for the debt.
Here are the key aspects of the loan:
- Up to £50,000 loan: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
- 100% guarantee: The scheme provides the lender/bank with a government-backed, full guarantee (100%) against the outstanding facility balance, both capital and interest. The borrower always remains 100% liable for the debt.
- Interest rate: The government has set the interest rate for this facility at 2.5% per annum, meaning businesses will all benefit from the same, low rate of interest.
- Interest paid by government for 12 months: The government will provide payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs.
- No repayments for first 12 months: Borrowers will not have to begin repayments for the first 12 months, thereafter capital will be repaid on a straight-line basis.
- Finance terms: The length of the loan is for six years but early repayment is allowed, without early repayment fees.
- No personal guarantees: No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle.
This loan facility may save many small businesses in these strange times we find ourselves in. You can find more information here if you need it.
Good luck if you are applying for a Bounce Back Loan yourself – do let us know your experience of it, hopefully it will be a good one!