How to Apply for a Small Business Coronavirus Bounce Back Loan

Small businesses can apply for the government’s coronavirus Bounce Back Loan Scheme and access up to £50,000, which will be quickly paid into their business bank account. How does this relate to the CBILS, and how can your business access the funds?

Nic Redfern Published on 29 April 2020. Last updated on 10 February 2021.
How to Apply for a Small Business Coronavirus Bounce Back Loan

Small businesses can now apply for the government’s coronavirus Bounce Back Loan Scheme and access up to £50,000, which will be quickly paid into their business bank account. How does this relate to the CBILS, and how can your business access the funds?

To support small businesses during the coronavirus pandemic the Chancellor Rishi Sunak announced a new business loan called the ‘Bounce Back Loan’.

The scheme was designed to quickly support small businesses that may run out of money soon, and who have been struggling to access credit through the Coronavirus Business Interruption Loan Scheme (CBILS).

The government later extended the Bounce Back Loan Scheme to give businesses the chance to tailor repayments according to their individual circumstances. Under the Pay as You Grow scheme, borrowers can choose to extend their loans, make interest-only payments or pause repayments for up to six months.

We review how the loan works and how to apply for a coronavirus small business Bounce Back Loan Scheme.

What is the new Bounce Back Loan Scheme?

The Bounce Back Loan is a new government scheme for small businesses who can apply for loans from £2000 up to £50,000 of financing from their lender to help them through the COVID-19 crisis.

Bounce Back Loans are 100% guaranteed by the government and opened for applications on 4 May 2020. The scheme will remain open until 31st March 2021.

Who can apply for the Bounce Back Loan Scheme?

You can apply for a loan if your business meets the following criteria:

  • is based in the UK
  • has been negatively affected by coronavirus
  • was not already in financial difficulties on 31 Dec 2019

The following are not eligible:

  • banks, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • further-education establishments, if they are grant-funded
  • state-funded primary and secondary schools

Can I apply for a Bounce Back Loan if I’ve received other Government loans?

You cannot apply for a Bounce Back Loan if you have already claimed for any of the following:

Coronavirus Business Interruption Loan Scheme (CBILS)

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

Covid-19 Corporate Financing Facility

However, if you have already received up to £50,000 under one of the above schemes then you are allowed to transfer it into the Bounce Back Loan scheme and have until 31 March 2021 to organise this with your lender.

How do I apply for a small business coronavirus Bounce Back Loan Scheme?

Applications can be submitted through a simple online form.

The accredited providers can be found on the British Business Bank’s website and on writing this article include:

  • AIB
  • Bank of Ireland UK
  • Bank of Scotland
  • Barclays
  • Clydesdale
  • Danske Bank
  • HSBC UK
  • Lloyds Bank
  • NatWest
  • Santander
  • Skipton Business Finance
  • Starling Bank
  • The Co-operative Bank
  • RBS
  • Tide
  • TSB
  • Ulster Bank
  • Yorkshire Bank

How much will a bounce back loan cost me?

The government will guarantee 100% of the loan and businesses won’t have to pay any fees or interest for the first 12 months.

Loans will be available with terms of up to 6 years. Businesses will not need to make any repayments during the first 12 months of the loan. The government is also working with lenders to agree on a low rate of interest for the remaining period of the loan.

How does this loan differ from the Coronavirus Business Interruption Loan Scheme?

The Coronavirus Business Interruption Loan Scheme (CBILS) received criticism from small businesses, as lots of small businesses were being declined funding.

This is because banks were deeming some applicants as not viable businesses to receive a loan.

CBILS is 80% backed by the government, whereas the Bounce Back Loan Scheme is 100% backed by the government. This means with this scheme the government will carry the risk of lending, instead of the banks. CBILS offers loans up to £5 million but as the lender bears 20% of the risk it is not as easy to get approval.

What does 100% government guaranteed mean?

The 100% government guarantee means that banks will not have to absorb losses on loans taken out by companies that may not be able to repay all of the debt. If a business cannot repay, and the funds cannot be recouped through normal means, the state will take a loss instead.

What other funding can I apply for?

For guidance on the full government support in place for businesses, read our coronavirus business support guide.

Businesses that do have sufficient security at the moment, and would be accepted for credit without the help of the scheme, could compare and apply for business loans in the usual way to see if they can find a suitable funding option.

High-street banks and online lenders both offer different types of funding, including short term business loans and asset financing.

For more information on how to start applying for funding, take a look at our guide to preparing for a business loan.

About the author:

Finance Director at NerdWallet UK and business adviser to SME's Nic is spokesperson for small and growing businesses with a strong understanding of the financial needs of business Read more

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