The key features of the scheme are as follows:
- Loans of up to £50,000: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
- 100% guarantees: The scheme provides the lender with a government-backed, full guarantee against the outstanding facility balance, both capital and interest. The borrower always remains 100% liable for the debt
- Interest rate: Set by the Government at 2.5% per year, meaning businesses will all benefit from the same, low rate of interest.
- Interest paid for a year: The government will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs.
- No initial principal repayments: Borrowers will not have to begin principal 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: And no recovery action can be taken over a principal private residence or principal private vehicle.
- Any business can apply for a microbusiness loan, provided:
- They are UK-based and established by March 1 2020
- Have been adversely impacted by the Coronavirus
- Are currently not using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility)
- Not in bankruptcy, liquidation or undergoing debt restructuring
Accredited lenders of Bounce Back Loans are listed on the British Business Bank website