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Bounce Back Loan Extended

5 November 2020, Advocates, Companies, Creative Industries, Employer, Sole Traders

When is the Bounce Back Loan Deadline?

The Bounce Bank Loan deadline for applications was originally scheduled for 4th November 2020 and then extended slightly to 30th November 2020.  The announcement by Rishi Sunak on 2nd November on the Bounce Back Loan extended deadlines for applications to 31st January 2021.  The Bounce Back Loan Scheme (BBLS) will help eligible small and medium-sized businesses affected by the coronavirus situation to borrow between £2,000 and £50,000.

The Government covers the first 12 months of interest (this means you pay 0% for the first year).  Further information can be found on the government website.

Bounce Back Loan Extended

Can I get more than one loan?

You cannot apply for more than one Bounce Back Loan for the same business.

Bounce Back Loan extended to allow top up

The original rules stated that you were not allowed to increase your Bounce Back Loan.  If you initially borrowed less than £50,000 you can  top it up to a maximum of £50,000 in total.

Bounce Back Loan extended until Jan 2021

The Bounce Bank Loan deadline for applications is 31st January 2021.

How much will I pay for this loan?

For the first year the government will pay the interest on your behalf, and we won’t ask you for any repayments.

After year one, your bank will charge a fixed interest rate of 2.5%, which has been set by the government, and a monthly repayment charge that will be shown in the loan agreement your bank sends you.

When will the money from the loan be in my account?

For successful applications banks aim to have the funds in your account within days of completing the online application.  In our experience the funds have normally appeared within hours.

Will I be liable for the debt?

Yes, whilst the government will be providing 100% guarantee to the Bank, customers are still liable for this debt and should ensure they are able to pay back the loan amount requested.

Will I have to provide a Personal Guarantee or my home as security?

No personal guarantees or security will be required.

Can I repay the Bounce Back Loan early?

You can repay the loan in full at any time without any early repayment fees.  Banks will impose a minimum payment amount if you want to repay part of the loan early.  For example you won’t be able to repay £50 here and £10 there.  Your extra payments may need to be at least £2,000.

Can I apply if I don’t have a Business Current Account?

Each bank is managing the loan application through their own systems.  You are typically required to have a business account to apply for the loan.

Am I covered by consumer protections?

The Bounce Back Loan Scheme is not subject to the usual consumer protections that apply to business lending, and as such will not have the benefit of the protection and remedies that would otherwise be available under the Financial Services and Markets Act 2000 or the Consumer Credit Act 1974.

You should not apply for an amount that you cannot comfortably afford to repay now and in the future to avoid the possibility of legal action.

What about State Aid Rules?

Some activities/sectors are excluded, including the state funded education sector, insurance providers (other than insurance brokers), and deposit taking banks.  You must also confirm during the application, that if your business was considered in difficulty on 31/12/19, that it is not in breach of de minimis State aid restrictions.

The government support in the form of interest payments on the first 12 months of the loan is state aid.  Interest paid on your behalf must therefore be included in the any state aid reporting.  This interest grant from the government must be reported to HMRC in your monthly payroll reporting (EPS).

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