New 100% government backed loan scheme for small businesses

Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders, the Chancellor announced today, Monday 27 April 2020.

Rishi Sunak said the new Bounce Back Loans scheme, which will provide loans of up to £50,000, would help bolster the existing package of support available to the smallest businesses affected by the coronavirus (Covid-19) pandemic.

The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days, and comes alongside the £6 billion awarded in business grants, supporting 4 million jobs through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.

The government, which has been consulting extensively with business representatives about the design of the new scheme, will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.

The loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days - providing immediate support to those that need it as easily as possible. Banks should be able to offer loan applications from next Monday, 4 May 2020.

The key points of this loan are:

• businesses will be able to borrow between £2,000 and £50,000 and access the cash within days
• loan term between 12 months and 6 years
• loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form
• low rates of loan for any repayments after the initial 12 months will be agreed between the UK banks and the government