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Bounce Back with the 100% gov guaranteed loan

The government hopes to open another of it's COVID19 response schemes, the Bounce Back Loan, on Monday 4th May 2020.


Under the bounce back scheme, banks will offer interest and payment free loans of up to £50,000 to small businesses that are entirely guaranteed by the government. Rishi Sunak, the chancellor, unveiled the initiative earlier this week in a bid to accelerate the flow of credit to smaller companies affected by the crisis. Bounce back loans will have lighter touch checks on the borrower, which the government hopes will mean they will be able to receive money within 24 hours of application. Under the terms of the new scheme, any company will be able to borrow between £2,000 and £50,000, with no interest or fees charged or capital repayments required during the first year. The loans will be fully guaranteed by taxpayers.


There are two major points to consider;

1. This is operated via bank lending, therefore each bank will be different in it's approach. Some will not participate at all so consider which bank you approach. As the loan is capped at £50,000, this is too small for some lenders as they cannot complete the amount of work involved and still make money. Remember they are a business also.

2. Demand will be high. Do not wait, apply for it now, not all banks have unlimited funds to lend whether guaranteed by the government or not. Senior bankers have questioned whether all providers will be set up to meet demand for the loans when the scheme goes live on Monday.


Stephen Barclay, chief secretary to the Treasury, told MPs this week that demand would be high partly because the majority of applications for the larger CBILS were for sums below the £50,000 threshold for the bounce bank loans. More than £4.1bn has been lent to small businesses through the existing CBILS scheme, according to figures available on Thursday, with £1.3bn of loans approved in the last week.


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