Bounce back loans are the most recent loan scheme announced by the government to help businesses affected by coronavirus. They are easy to apply for and you can receive the money quickly – possibly within a day or two of the loan being agreed.
The minimum you can get is £2,000, and the maximum is £50,000 or 25% of turnover. So for example, if your annual dental income is £80,000 before expenses are taken off, then the most you can get as a bounce back loan is £20,000.
The government guarantees 100% of the loan
Often with business loans, you need to use something you own, such as your house, as security, which meant if you couldn’t repay the loan then you could lose your home.
However, this is not the case with bounce back loans. If for some reason in the future there’s no way you can repay the loan, the government will step in and repay the loan to your lender.
Who can get a loan?
Almost all self-employed people and companies can get a bounce back loan. You need to be:
- based in the UK
- established in business before 1 March 2020
- adversely impacted by the coronavirus
So almost any business in the UK can get one of these loans.
However, you can’t apply if you’ve already got a loan under the first loan scheme the government set up – the Coronavirus business interruption loan scheme.
How much will it cost me?
The terms of the loan are very favourable.
No fees or interest are charged in the first 12 months. You don’t pay anything at all until one year after you receive the loan.
After 12 months, the interest rate will be 2.5% a year, which is a very low rate of interest for a business loan.
The total loan length is 6 years. You’ll start to make repayments after the first year, so you’re paying it back over 5 years. If you get a £20,000 loan, you’ll pay £376 a month for those 5 years. The total interest of £2,560 is tax-deductible.
However, you can repay the loan at any time before the 5 years are up and no early repayment fees will be charged.
There are 11 lenders making bounce back loans, many of them are the high street banks. The simplest way is to apply to whichever bank you have your business bank account with. As they can see your business bank account history, they will need you to supply less information.
You can also apply to the bank you hold your personal account with, or indeed a bank you don’t have an account with. However, you’ll need to open an account with that bank when you apply for the loan.
If for any reason you are refused a loan you can apply for a loan with another lender. The loans are not linked to your credit score.
Government guidance on making to apply for a coronavirus bounce back loan://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan