The chancellor has announced a new Bounce Back loan scheme, allowing small businesses hit by the impact of coronavirus measures to apply for up £50,000, with the government guaranteeing 100% of the advance.
Billed by chancellor Rishi Sunak as a “simple, quick, easy solution for those in need of smaller loans,” businesses can apply from lenders using a two-page standard form with no forward-looking business viability tests or eligibility criteria.
According to the government press release, businesses can apply for a minimum of £2,000 up to a maximum of £50,000, or 25% of business turnover, with the government paying the interest for the first 12 months.
The scheme will open from 9am next Monday (4 May 2020), and according to the Chancellor most loans will be paid within 24 hours of approval. Businesses will be able to access the loans through the existing network of accredited lenders.
Speaking in the House of Commons, where he had earlier announced the microloan scheme, Sunak said the new scheme would help “bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.”
In his Statement, Sunak reiterated that he “remained unconvinced” of the case for rolling out a 100% government guarantee across all the state’s coronavirus loan schemes.
“We shouldn’t ask taxpayers to bear all the risk of lending almost unlimited sums to businesses who may have very little prospect of paying those loans back – and not necessarily because of coronavirus, said the Chancellor. “Instead, the new Bounce Back Loans carefully target the extraordinary level of state support at those who need it most.”