What is a Business Bounce Back Loan and where can I apply?

Jun 10, 2020

The coronavirus Bounce Back Loan Scheme (BBLS) is designed to help businesses affected by the COVID-19 outbreak access finance faster.

What is a Business Bounce Back Loan and where can I apply?

Bounce Back Loans are specifically for SMEs in the UK that are experiencing cash flow problems or revenue loss due to the pandemic. Businesses can benefit from up to £50,000 of finance which is available through a number of British Business Bank (BBB) accredited lenders and partners. You can see the list of accredited vendors on the BBB’s website.

At the time of writing, there are 20 accredited lenders, including high street banks like Barclays, HSBC and Natwest and Lloyds and alt-lenders (some of which are on the Funding Options platform), such as Tide.

Eligible SMEs can borrow a six-year term loan ranging from £2,000 to 25% of its annual turnover (the maximum amount available is £50,000). The UK government has pledged to guarantee 100% of the loan, making it more accessible, and lenders are not permitted to take personal guarantees or recovery action over a borrower’s personal assets (such as their main home or personal vehicle).

Barista making coffee

Bounce Back Loans are enabling small businesses to get back on their feet.

With a Bounce Back Loan, there aren’t any fees or interest payable for the first 12 months. Following the first year, the interest rate will be 2.5% and borrowers can choose to repay the loan early without incurring a fee. 

As with any loan, the borrower remains fully liable for the debt.

Bounce Back Loan eligibility criteria

Here are some of the points you’ll need to meet to be accepted for a Bounce Back Loan. This is an overview and more information about Bounce Back Loan eligibility can be found on the Frequently Asked Questions section of the BBB’s website. 

You can apply for the BBLS if:

  • Your business is UK-based

  • It was established before 1 March 2020

  • It has been negatively impacted by the coronavirus

  • You can confirm that you’re complying with additional  state aid restrictions if your business was classed as a “business in difficulty” on 31 December 2019

  • It is not using the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s COVID Corporate Financing Facility Scheme (CCFF) – unless the Bounce Back Loan will refinance the whole of the above facilities

  • It is not in bankruptcy or liquidation at the time of application 

  • It gets more than half of its income from its trading activity (not including charities or further education colleges)

Bounce Back Loans are available to businesses operating in all sectors, excluding credit institutions that fall within the remit of the Bank Recovery and Resolution Directive, insurance companies, public-sector bodies and state-funded primary and secondary schools.

How to apply for a Bounce Back Loan

The BBB recommends approaching a lender directly through its website and suggests trying your own lender first (you can always try elsewhere if you’re unsuccessful). You’ll be asked to fill out a short application form to self-certify that you meet the eligibility criteria. If the lender deems you eligible, they will carry out the necessary checks before making a decision.

What other financial support is available if I’m unsuccessful?

The Bounce Back Loan Scheme is just one of many financial support measures outlined by the government. If you’re not eligible for the BBLS, you might be eligible for another scheme. You may also want to consider other, non-coronavirus specific forms of finance such as asset refinance, invoice finance or a bridging loan.

You can always use Funding Options’ digital tool to find out what finance your business might be eligible for. Feel free to get in touch with our team for more information. 

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