Coronavirus: Bounce Back Loans launch to help small firms

May 04, 2020

Applications for Bounce Back Loans have opened in a bid to help more small businesses navigate the coronavirus crisis.

The scheme, which offers loans via banks of between £2,000 to £50,000, is 100% guaranteed by the government.

The money is interest and payment free for the first year - with rates of 2.5% per annum after the first 12 months.

Ministers say access should be easier for firms to navigate as the standardised form has only seven questions.

Banks handling the loans will not be required to run credit checks or assess the long-term viability of applicants.

The micro loans, of up to six years, were revealed by the Chancellor just a week ago amid frustration that money from the Coronavirus Business Interruption Loan Scheme (CBILS), designed for small and medium-sized firms, was slow to leave banks.

Lenders are liable for 20% of the risk under CBILS and business groups said evidence of lenders dragging their feet meant the taxpayer should underwrite 100% of the loans.

Banking industry figures last Thursday revealed that £4.1bn had been dispersed to more than 25,000 firms under the CBILS scheme to date.

The Treasury said in a statement: "The Bounce Back Loan scheme is the latest step in a package of world-leading support measures launched by Chancellor Rishi Sunak - with £7.5bn already awarded in business grants, four million jobs supported through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms."

Mr Sunak added: "Small businesses will play a key role creating jobs and securing economic growth as we recover from the coronavirus pandemic.

"The Bounce Back loan scheme will make sure they get the finance they need - helping them bounce back and protect jobs."

Tej Parikh, chief economist at the Institute of Directors, responded: "The government has kept an open ear to businesses, and its continued efforts to adapt its response are welcome.

"The business interruption loan scheme has started to reach the front line, but small firms have still been having difficulty accessing finance.

"This additional measure should help more of those firms get the cash they need to see them through the weeks and months ahead."

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