Updated: 3rd August 2021
After facing criticism for failing to successfully meet the demands of its Coronavirus Business Interruption Loan Scheme (CBILS), the government has now unveiled new plans to help smaller businesses gain access to much needed finance in light of the COVID-19 pandemic. The Bounce Back Loan scheme will close to new applicants on 31 March 2021, and will be replaced by the Recovery Loans Scheme.
The government’s ‘bounce back loans’ were announced on Monday 27th April by Rishi Sunak, conceding that other funding measures outlined by the chancellor in March were simply not hitting the mark for many businesses across the UK.
The bounce back loans are available to SMEs from Monday 4th May and the government insists that business owners will have guaranteed access to loans of up to £50,000 within 24 hours of applying.
This new loan scheme will be 100% backed by the government, meaning the Treasury will take on all the default risk. Small businesses will be able to apply for loans worth 25% of their turnover, up to £50,000, and the government will pay the interest for the first 12 months.
Mr Sunak told the House of Commons that the new micro-loan scheme is designed to help small businesses struggling to access credit during the current lockdown.
Small business support
This announcement will certainly provide some optimism for small businesses; many of which have failed so far in attaining critical business finance – a worrying trend across the UK economy. According to recent research by ACCA, 39% of businesses have less than two weeks’ worth of cash to keep them afloat in these turbulent times – so any government measure to help cash flow has to be a primary port of call.
If your small business needs alternative funding measures or is struggling to access any of the government’s coronavirus loan schemes, you can contact us on Live Chat or visit our dedicated finance support website by clicking the Business Finance link in the header section.