A guide on how to apply for the coronavirus Bounce Back Loan Scheme (BBLS)

The government has announced a package of support to help small businesses through the coronavirus pandemic. This includes the Bounce Back Loan Scheme (BBLS) – here’s how to apply.

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What is the Bounce Back Loan Scheme (BBLS)?

After some businesses struggled to access credit through the Coronavirus Business Interruption Loan Scheme (CBILS), the Chancellor announced a new Bounce Back Loan Scheme (BBLS).

The main difference between the BBLS and the CBILS is that the government guarantees 100 per cent of the finance, plus you can only access a maximum of £50,000.

The BBLS went live on 4 May 2020 and had already received 100,000 applications by the end of the day, according to the Financial Times. They also reported that the average loan is around £30,000.

Like the CBILS, the BBLS is operated through the British Business Bank and its accredited lenders. Through the BBLS:

• you can access between £2,000 and up to 25 per cent of your turnover (maximum of £50,000)
• the government guarantees 100 per cent of the finance to the lender
• the government pays the first 12 months of interest
• you don’t need to make any repayments for 12 months
• interest is capped at 2.5 per cent
• the loan term is six years, but you can make early repayments without being penalised

How to apply for the Bounce Back Loan Scheme (BBLS)

1. Am I eligible for the BBLS?

Your business needs to:

• be based in the UK
• have been operating before 1 March 2020
• have been negatively impacted by coronavirus
• make 50 per cent of its income from trading activity
• not have been a ‘business in difficulty’ on 31 December 2019
• not already be claiming under the CBILS (although you can transfer loans of up to £50,000 under the CBILS to the BBLS until 4 November 2020)
• not be bankrupt, in liquidation, or restructuring debts at the time of application

You'll have to self-certify that your business is eligible as part of the application.

2. Approach your lender

Lenders taking part in the scheme include Barclays, HSBC and Natwest – the British Business Bank has a full list of accredited partners.

You should approach your current bank for finance. While there isn’t anything stopping you from going elsewhere if they can’t give you finance, the Financial Times reports that out of the 10 lenders taking part on day one, only HSBC was offering non-customers a loan.

The British Business Bank also mentions that high demand for the BBLS means that your lender’s phone lines will be busy, so keep this in mind when applying.

Mike Cherry, Chairman of the Federation of Small Businesses (FSB), said the application process can vary from lender to lender: “Some have submitted their short application forms with no trouble at all, others have been told to wait for forms to arrive, and some have struggled to make an application due to site failures.”

3. Complete self-certification

When you apply for a loan, you’ll need to self-certify that you’re eligible for the BBLS based on the criteria above. If your business is eligible, the British Business Bank says the application will be “subject to appropriate customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks”.

4. Your lender will make a decision

Your lender will decide whether to offer you finance. Unlike the CBILS, your lender can’t ask for a personal guarantee and the loans are guaranteed 100 per cent by the government.

While they can’t take recovery action on the primary vehicle or main home of sole traders or members of partnerships, your lender could go after other personal assets.

The government guarantees 100 per cent of the loan but your business is still liable for all of the debt and repayments.

And if your bank turns you down, you can still apply with a different lender.

This article is intended as a guide only. Before making any decisions on borrowing money, you should seek independent financial advice.

If you're thinking of applying for a Bounce Back Loan, our partners at Swoop may be able to help. Swoop can help simplify and speed up the application process so that you can get access to the finance that’s right for you. Visit Swoop’s website and enter a few key details about your business to get started.

Have you applied for the BBLS? Let us know how it went in the comments below.