Posted: Mon 27th Apr 2020
A new scheme for micro-businesses to access loans of up to £50,000 within 24 hours of being approved is to launch.
Speaking in the House of Commons, chancellor Rishi Sunak said the new micro-loans will have a 100% government guarantee for the lender, an increase from the 80% for loans through the main Coronavirus Business Interruption Loan Scheme (CBILS).
The Bounce Bank Loans scheme will launch at 9am on 4 May with businesses able to apply for loans worth 25% of turnover up to £50,000. The minimum loan is £2,000 and they are interest free for 12 months. No repayments are due in the first year.
Sunak said: "There will be no forward-looking tests of business viability; no complex eligibility criteria; just a simple, quick, standard form for businesses to fill in."
Most businesses will receive funding within 24 hours, he promised.
The move is in response to criticism that small businesses are struggling to access funding through CBILS.
The government has yet to confirm if the lenders for Bounce Bank Loans will be the same as those accredited for CBILS.
Emma Jones, founder of Enterprise Nation, said: "These new Bounce Back Loans will close one of the gaps facing micro firms. The chancellor is correct that this group are less keen and less able to take on debt under normal circumstances - but may now feel slightly more confident that this bridging finance now exists.
"The big question now is whether the banks can actually make this work and get those loans out of the door in 24 hours. The other question is over whether they will be affordable in the long run."
We are keeping you updated on the latest information on how to access the government's coronavirus business support here. You can also find advice and ask a question on Enterprise Nation's coronavirus business advice hub. Follow Enterprise Nation on Twitter too for updates.