- businesses will be able to borrow between £2,000 and £50,000 and access the cash within days
- loans will be interest free for the first 12 months
- businesses can apply online through a short and simple form
- scheme launches on 4 May, 2020
The UK government has announced the new Bounce Back loans scheme for small businesses.
The fast-track finance scheme will provide loans of up to £50,000 to ensure that small firms which need vital cash injections to keep operating can get finance in a matter of days. No repayments will be due during the first 12 months.
The government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months.
The loans have been designed to be easy to apply for through a short, standardised online application, and should reach businesses within days.
The Chancellor of the Exchequer, Rishi Sunak, said: “Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis”.
The scheme will launch for applications on Monday 4 May. Firms will be able to access these loans through a network of accredited lenders.
Mike Cherry, Federation of Small Businesses national chairman, said: “This crucial new initiative should enable thousands of small businesses to access the working capital they need quickly, helping to protect the millions of jobs they provide in every part of the UK.
This step forward marks another decisive intervention from the Treasury and the Business Department, building on existing support in an innovative way. Swift delivery is now key, and we also look forward to working with government in the long-term to enhance market competition, including that provided by non-bank lenders.
We are pleased to see the Chancellor and the Business Secretary listening to the needs of small businesses, and we will continue to work with them to make sure small firms and the jobs they provide are protected throughout this public health challenge and that small firms are at the forefront of leading the recovery.”
Dame Carolyn Fairbairn, CBI director-general, said: “The Chancellor’s new 100% guaranteed loan scheme for small businesses is transformational. Sole traders, micro-firms and entrepreneurs will now have a simple route to fast finance to stay afloat, without red tape or time-consuming checks. Thousands of businesses could be saved by this lifeline. Banks now need to continue their work in overdrive to get the loans flowing faster.
“It’s good to see the Chancellor listening to business, proving that where there’s a need to adjust schemes, he will do what it takes. It will be vital to maintain this approach in the months to come. Every job saved today will ensure a faster recovery tomorrow.”
Jonathan Geldart, IoD director general, added: “This is a welcome intervention, which should help ensure more firms can access the finance that could see them through this crisis. Business leaders will appreciate the government’s continued flexibility in adapting their response to what’s happening on the ground. It’s crucial that the government’s support cuts through to those who need it. Having a quick and simple process will be vital, and we need to remember that taking on debt is always a difficult decision for small firms.”
Adam Marshall, BCC Director General, commented: “The Chancellor has demonstrated he is listening to the concerns of our business communities and taking steps to get cash to the front line where it is needed. This new route for our smallest companies to apply quickly and get a fast decision will be crucial to those who have struggled to get a CBILS loan.”