by Greystone
Posted On : 2020-10-08
The
application date for the Bounce Back Loan Scheme (BBLS) has now been extended
to 30 November, and the loan repayment process made more flexible.
To date, the BBLS
has provided more than a million loans between £2,000 and £50,000 to businesses
affected by the Covid-19 crisis.
Businesses can
borrow up to 25% of their annual turnover, subject to a maximum loan of
£50,000. Loans are 100% guaranteed by the government and are interest-free for
the first 12 months, with no personal guarantees required. After 12 months, the
annual interest rate is set at a very attractive 2.5%.
Flexible repayments
The original terms of the BBLS required repayment over six years. The new terms provide for more flexibility:
What can a loan be used for?
The BBLS was introduced
quickly and relied on self-certification rather than extensive credit checks.
There is little restriction on what a loan can be used for, so long as it
benefits the business.
Even if you are
unsure whether additional business finance is required, there is no downside to
having the funds sitting unused for a year and then repaying in full.
Alternatively, an interest-free bounce back loan could be used to repay
existing finance, which is likely to be much more costly.
Additionally, the
loan can be used to support your personal income, considering it drawn from
self-employment, or remuneration/dividends from a company.
Not surprisingly,
the BBLS is expected to result in widespread fraud, with the government
unlikely to receive value for money.
The BBLS application process can be found here, along with a link to accredited lenders.