Are you a small business owner looking for financial support to bounce back from the challenges of the past year? Look no further! In this complete guide, we’ll dive into the world of Bounce Back Loans – a lifeline for entrepreneurs in need. Whether you’re seeking clarity on eligibility criteria or wondering how to apply, we’ve got you covered. Join us as we unravel this financing solution and discover how it can pave the way towards success and resilience for your business. Let’s get started on your journey to thriving once again!
What is a Bounce Back Loan?
A Bounce Back Loan is a type of business loan which is a government-backed loan that can be used to support small businesses during the coronavirus pandemic. The loan is 100% government-backed, meaning that the government will cover the cost if you cannot repay the loan. The loan is available to businesses adversely affected by the pandemic and based in England or Wales.
The maximum loan amount is £50,000, and the interest rate is 2.5% per annum. Repayments are not due until 31st December 2023 and can be made early if you wish. There are no fees or charges for taking out a Bounce Back Loan.
Benefits of a Bounce Back Loan
Assuming you are referring to the UK government scheme, a Bounce Back Loan is a 100% government-backed loan available to small businesses. The key benefits are:
- Loans of up to £50,000 are available
- The loan is 100% backed by the government
- No fees or interest for the first 12 months
- Flexible repayment terms
Eligibility for a Bounce Back Loan
In order to be eligible for a Bounce Back Loan, your business must be based in the UK, and the coronavirus pandemic must have negatively impacted you. Furthermore, you must not have already accessed the Coronavirus Business Interruption Loan Scheme (CBILS). If you have already applied for and received a loan through the CBILS, you are not eligible for a Bounce Back Loan.
Other eligibility criteria include:
- Your business must be an SME (Small or Medium-sized Enterprise) with an annual turnover of up to £45 million
- Your business must have been trading on 1st March 2020
- You must self-certify that your business has been adversely affected by coronavirus
How to Apply for a Bounce Back Loan?
If you’re looking to apply for a bounce-back loan, there are a few things you’ll need to keep in mind. First, you’ll need to make sure that you’re eligible for the loan.
If your business meets those criteria, you can begin the application process. The first step is to fill out an online application form on the British Business Bank website. Basic information about your firm, including your company name and contact information, will be requested on this form. Once you’ve submitted the form, you’ll receive a confirmation email with further instructions.
The next step is to gather the necessary documents. You’ll need to provide proof of your business’s turnover and evidence of its financial hardship due to COVID-19. Once you have all of the required documents, you can submit them through the online portal.
Once your application is complete, it will be reviewed by the British Business Bank. If approved, you’ll receive the loan funds in your bank account within days.
Repayment Options for a Bounce Back Loan
If you’re thinking about taking out a bounce-back loan, it’s important to understand the repayment options. You’ll need to repay the loan in full after six years, but you can make early repayments at any time without penalty.
The government will also provide support for interest payments for the first 12 months of the loan. After that, you’ll be responsible for paying any interest that accrues on the loan.
You can choose to make repayments on a monthly or weekly basis, and you can set up direct debits to make things easier. The minimum repayment amount is £50 per month (or £10 per week), and you can pay more than this if you want to repay the loan early.
Alternatives to the Bounce Back Loan
If you’re looking for an alternative to the Bounce Back Loan, a few options are available. The first is the Coronavirus Business Interruption Loan. This loan is available to small and medium-sized businesses facing financial difficulties due to the coronavirus pandemic. The loan is capped at £5 million and can be used for any business purpose.
Another option is the Coronavirus Large Business Interruption Loan. This loan is available to businesses with an annual turnover of more than £45 million. The loan is capped at £25 million and can be used for any business purpose.
There is the Future Fund. This fund is available to startups that are facing financial difficulties as a result of the coronavirus pandemic. The fund provides loans of up to £5 million, which can be converted into equity if the company raises additional funding from private investors within three years.
Conclusion
A bounce-back loan can be a great way to get your business back on its feet during these difficult times. This article has provided an overview of the loan, who it’s for, and how to apply for one. With a few simple steps, you could access the funds your business needs to survive and thrive in these trying times.
Take this information into account when considering whether a bounce-back loan could serve as the right form of finance for your company, and make sure that you talk with an advisor if you need any more help or advice before applying.
FAQ – What is a Bounce Back Loan?
How long to pay off a bounce-back loan?
Assuming you make the minimum repayments on your bounce-back loan, it will take you two years and ten months to pay off the full loan amount. This is based on an assumed interest rate of 2.5% per annum.
To calculate how long it would take to pay off your bounce-back loan, divide the total loan amount by the monthly repayment amount. For example, if you have a loan of £5,000 and you’re repaying £100 per month, it would take you 50 months (4 years and two months) to repay the full loan amount.
How much interest is charged on a bounce-back loan?
The amount of interest charged on a bounce-back loan will depend on the terms and conditions of the loan. However, as with any other type of loan, the interest rate will be based on the prime rate plus a margin. The margin is typically around 2.5%, but this can vary depending on the lender.
What happens if you can’t pay back BBL?
If you are unable to repay your Bounce Back Loan in full by the end of the loan term, you will need to contact your lender to discuss your options. Depending on your circumstances, they may be able to offer you a repayment plan or extend the loan term. If you cannot repay the loan, you may be required to sell any assets used as collateral for the loan.
Can I sell my business with a bounce-back loan?
A bounce-back loan is a government-backed loan scheme that was introduced in May 2020 in response to the COVID-19 pandemic. The scheme allows small businesses to borrow up to 25% of their annual turnover, up to a maximum of £50,000, at an interest rate of 2.5%. The loan is 100% guaranteed by the government, meaning that if you default on the loan, the government will cover the cost of the outstanding debt.
The main benefit of a bounce-back loan is that it can be used to support your business during times of financial difficulty. If you are thinking about selling your business, a bounce-back loan could give you the financial stability you need to make the sale successful.
If you are considering selling your business and would like to learn more about how a bounce-back loan could help you, please contact one of our expert Business Transfer agents today.
