The Bounce Back Loan
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Today we conferred with Swoop, and Futrli to get the most up-to-date information on the government’s most recent scheme the Bounce Back Loan.
Andrea Reynolds the founder and CEO of Swoop, a leading UK funding platform, and Helen Cockles the COO of Futrli, the UK’s leading cash flow forecasting and reporting software, gave us an update on this new scheme for funding small businesses through the current crisis.
The ‘Bounce Back Loan’ is a fast-track loan for smaller companies. As a default, it is interest-free for 12 months and comes with an initial 12-month capital repayment holiday.
It is re-payable over six years and companies can apply for a loan in the amount of 25% of turnover up to a maximum of £50,000.
To qualify the borrower must satisfy the following criteria:
The discussions around applying for the loan and accessing funds came with boilerplate warnings and these were as follows:
It is unchartered territory where brokers, banks and consumers are currently doing their best to read between the lines but as an estimate here is what you might expect:
This has not been specified but it is likely they will use turnover up to 31st December 2019 or prior year statutory accounts.
Yes, as long as those entities are not part of the same group.
This has not been specified but the scheme is not intended to be used by companies needing to refinance.
In all likelihood, banks will be looking at the company’s balance sheet to assess whether at 31st December 2019 the company has a net asset position and could thus be judged as solvent.
You will be asked to self-certify that there were no events after 31st December that would change this position.
This has not been specified although it would be reasonable to assume that banks may choose to strictly adhere to the criteria for fear of not being guaranteed or indemnified by the government if they stray outside of the defined criteria.
This will in the end come down to the lender.
Yes.
In fact, the introduction of the bounce back loan means that you can now access up to £300,000 in loan finance without needing to personally guarantee the debt.
Under the CBILS scheme, you can access up to £250,000 without a personal guarantee and the bounce back loan can top that up by an additional £50,000 PG free.
If you are one of the lucky few to have received a loan under the Business Interruption Loan Scheme you may find your bank call you to refinance £50,000 of it under the bounce back loan to reduce their own exposure to risk.
If you are not planning to use your accountant, advisor or broker to apply for these loans and are going it alone then a focussed and patient approach will give you the best chance of success.
Do not apply to half a dozen lenders at the same time. Each of them will perform a hard credit check and reduce the credit score of the company to such a level that you will not get borrowing.
Apply to one lender wait for a response and then a few weeks later apply to the next.
Avoid damaging the credit rating of your business and give yourself the best chance at success.
If you need help or want some guidance please get in touch with our team today.