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Coronavirus Bounce Back Loan Scheme (CBBLS)

13-May-2020

Guidance Note

 

Coronavirus Bounce Back Loan Scheme (CBBLS)

 

 

Please be aware that this note is based on the information published as at 04 May 2020 and is intended to provide guidance on how Foremans LLP believe at this juncture the loan scheme will be implemented. The below is based on Foremans LLP’s interpretation of the available information. You should not regard this as advice on how the scheme will operate as the scheme is continuing to develop.

 

We have compiled some frequently asked questions which may help to explain our understanding of the scheme:

 

What is the Coronavirus Bounce Back Loan?

 

The UK Government has announced an additional loan scheme aimed to fast track loans with a 100% government backed guarantee for small businesses affected by the coronavirus pandemic.

 

When will the scheme be available?

 

The Chancellor of the Exchequer, Rishi Sunak, announced the scheme on 27 April 2020. The scheme is launching on Monday 04 May 2020.

 

What finance is available?

 

Businesses will be able to borrow between £2,000 and £50,000.

 

Are interest and fees charged?

 

No fees or interest will be payable in the first 12 months. The government will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable. Loan terms will be up to 6 years and the government has set the interest rate at 2.5% for the remaining period of the loan.

 

Do I need to make repayments in the first 12 months?

 

No. Borrowers will not have to repay any of the capital borrowed during first 12 months of the loan. After the 12 months the capital will be repaid on a straight line basis.

 

Can I repay the loan early?

 

Yes. The length of the loan will be 6 years. However early repayment is allowed without early repayment fees.

 

What guarantee will I need to provide?

 

The government will guarantee 100% of the loan. No personal guarantees are allowed. No recovery action can be taken over a principal private residence or principal private vehicle.

 

 

 

 

Who is liable for the debt?

 

The borrower always remains 100% liable for the debt.

 

Who can apply?

 

You can apply for a loan if your business:

 

·         Is based in the UK and was established by 01 March 2020;

·         Has been negatively affected by coronavirus;

·         Was not an “undertaking in difficulty” as at 31 December 2019. An “undertaking in difficulty” would be one in bankruptcy, liquidation or undergoing debt restructuring.

 

Who cannot apply?

 

The following businesses are not eligible to apply:

 

·         Banks, insurers and reinsurers (excluding insurance brokers)

·         Public Sector bodies

·         State funded primary and secondary schools

·         Businesses already claiming under CBILS

 

What if I already have a loan through Coronavirus Business Interruption Scheme (CBILS)?

 

If you have already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan Scheme you can arrange with your lender to do so up until 04 November 2020.

 

How do I apply?

 

The intention is for the process to be as easy as possible with a 2 page standard form with no forward looking business viability tests or eligibility criteria.

 

How do I access the scheme?

 

The scheme will be launched on 04 May 2020. Businesses will be able to access these loans through the existing network of accredited lenders. The lenders are expected to include:

 

·         High Street Banks

·         Challenger Banks

·         Asset Based Lenders

·         Smaller Specialist Local Lenders.

 

A full list of the lenders is available at:

 

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/current-accredited-lenders-and-partners/


 

 

When will the funds be available?

 

The UK Government intends the funds from these loans to be made available within 24 hours of approval.

 

Further useful information can be found at:

 

https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan

 

https://www.british-business-bank.co.uk/new-bounce-back-loans-scheme-opens-for-smallest-uk-businesses/

 

 

If you would like to discuss any of the issues noted above, please contact us on:

 

01244 625 500 or 01978 364 000

contactus@foremansllp.com

 

Whilst all due care and attention has been taken in the preparation of these notes no liability can be accepted for any omission or item contained therein.

 

Foremans LLP

04 May 2020


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