Pamela Muir and Chris Allan at Thorntons, highlight the latest updates and changes.

In response to criticism from business that the administration of the CBILS scheme has been too slow to meet their urgent need for funding, and although there have been over 20,000 loans made already, the Chancellor has announced a revision of the process, and introduced the Bounce Back Loan Scheme for smaller businesses, which will allow loans funds to be paid out within “days” from application.

Who can apply?

Small Businesses can apply.  What that actually means is slightly unclear as yet, but from the commentary so far, it would seem that it is intended to support; small companies, sole traders, and micro-businesses, with a maximum turnover of £200,000.  We expect further guidance as the scheme goes live.

When and where can I apply?

The scheme will go live on 4th May and applications will be through a standardised, simplified, online application form. Application should in the first instance be to any of the accredited lenders.  We assume that it will be the same lenders already accredited to provide CBILS, and if your current Bank is accredited, you should start with them.

How much can I borrow?

Businesses will be able to borrow between £2,000 and £50,000 and access the cash within a matter of days from application.  It is limited to 25% turnover, with the cap of £50,000.

The loans will be interest free for the first 12 months, but can be for longer than a year if needed.  The applicable interest rate after the first 12 months has not yet been disclosed, but the Chancellor has stated that it will be “low and standardised”.

How quickly will the loans be paid to me?

The government have said it will be “days” from application to payment.

Responding to significant criticism that the CBILS scheme has been too slow, and that accredited lenders are refusing some loans, the BBLS will benefit from the government providing lenders with a 100% guarantee for the loan, and underwriting any costs and expenses in the first 12 months.  This is designed to avoid any delay with lenders assessing viability of your business, in fact, it appears as if viability criteria has been varied so that all that needs to be assessed it whether or not your business was viable before the corona virus pandemic.

The BBLS guarantee is to the lender and not to your business.  Your business will always remain 100% liable for repayment of the loan.