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

9 Feb 2021

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

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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).

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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.

BBLS update: repayment support announced for SMEs 

On Friday 5 February 2021, Chancellor Rishi Sunak announced that SMEs are to get more time to repay state-backed Bounce Back Loans (BBL) taken out to help survive the coronavirus lockdown. The aim is to help small businesses manage their cash flow and have a better chance of getting back to growth.

Currently, the scheme allows companies to get interest free loans for the first year, although this means many businesses are due to start repaying the interest on their loans back from May. However, as the economic recovery is still expected to be weak by May, Mr Sunak wants to continue to support SMEs throughout the recovery. The changes to the BBL scheme includes giving small businesses the option to extend the loan term length from six to ten years under a "pay-as-you-grow" initiative.

The new arrangements means businesses have the option of:

  • Extending the length of the loan from six to 10 years at the same fixed interest rate of 2.5%

  • Making interest-only payments for six months, with the option to use this up to three times throughout the loan

  • Pausing repayments entirely for up to six months, with this option being available once during the term of the loan

Businesses can use these options individually or in combination with each other. The new"pay-as-your-grow", plan will offer flexibility when it comes to repayment options as the economy strengthens.

Since the launch of the Bounce Back Loan Scheme in May 2020, the scheme has supported nearly £45 billion of loans to 1.5 million businesses.

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.

The Funding Options team is here for your business during coronavirus and beyond. As well as partnering with 40+ CBILS accredited lenders, we work with 120+ lenders providing a wide range of alternative finance products, from working capital finance to bridging loans.

An easy way to find out whether you can get a CBILS loan is to check your eligibility using our online platform. Once you’ve submitted a few details, we can start matching you with lenders. Getting a quote won't affect your credit score.

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 reach out to the Funding Options team at any time for more information on CBILS loans and other finance products. Call 0333 334 1015 to speak with a business finance expert.

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Stuart Lawson

Chief Commercial Officer

Stuart is Chief Commercial Officer at Funding Options where he plays a key role in driving the growth of the business and its relationships with more than 120 partners. A finance industry veteran, he has a strong background in alternative finance, corporate and commercial banking, as well as global transaction banking.

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