Coronavirus Bounce Back Loan and Top Up Business Grant Funds Scheme
The UK Government is continuing to provide daily updates and publications on their measures to deal with the disruptions caused by COVID-19. Recent announcements include the launch of the Coronavirus Bounce Back Loan announced last week, and a Top Up to the Business Grant Funds Scheme.
Useful links to UK Government guidance and our previous updates can be found at the end of this article.
Coronavirus Bounce Back Loan
The UK Government has launched the Coronavirus Bounce Back Loan today (Monday 4 May) that was announced last week. This new loan scheme has been designed to help small and medium sized businesses borrow smaller amounts more easily. It has been reported that the application process is an online form with 7 questions and that funds will be paid to businesses within days.
A business can apply to borrow between £2,000 and £50,000 and the loan will be 100% guaranteed by the UK Government. The amount a business can borrow will be the lower of 25% of turnover or £50,000. Loan terms will be allowed up to 6 years with no interest, fees or repayments due for the first 12 months. Interest will be chargeable at 2.5% after the first 12 months.
Those businesses that have already obtained a loan under the Coronavirus Business Interruption Loan Scheme will not be able to use this scheme but may transfer their loan to this scheme if under £50,000 has been borrowed. Switching a Coronavirus Business Interruption Loan to a Coronavirus Bounce Back Loan is advantageous as the terms of the Bounce Back Loan are more beneficial.
It is important to note this scheme is a Loan and not a Grant. The 100% UK Government guarantee is to protect the banks from bad loans. Banks are being instructed to undertake the same measures of recovery on these loans as with any other loan before falling back on the 100% UK Government guarantee.
UK Government guidance on the Coronavirus Bounce Back Loan (including a link on how to apply) can be found here.
A UK Government press release on the Coronavirus Bounce Back Loan can be found here.
A UK Government letter to lenders on the Coronavirus Bounce Back Loan can be found here.
Top Up to the Business Grant Funds Scheme
Currently there are two Business Grant Funds Schemes. These are the Small Business Grant Fund (SBGF) which pays a grant of £10,000 to those businesses in receipt of either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR), and the Retail, Hospitality and Leisure Grant (RHLG) which pays a grant of £10,000 or £25,000 to those businesses in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure) with a rateable value of less than £51,000. Details of these schemes can be found here and businesses are already receiving these grants.
The UK Government has acknowledged that in some instances businesses these grants were designed for are not eligible. The UK Government has therefore set up an additional discretionary fund to provide further grants. This fund is aimed at small businesses with ongoing fixed property-related costs. The UK Government is asking local authorities to prioritise businesses in shared spaces, regular market traders and small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates. Local authorities may choose to make payments to other businesses based on local economic need. The allocation of funding will be at the discretion of local authorities.
A UK Government press release on the Top Up to the Business Grant Funds Scheme can be found here.
Links
Our previous updates can be found on Facebook and LinkedIn or on our website.
A UK Government business support website can be found here. It contains guidance on all Coronavirus financial measures and business advice.
A UK Government general COVID-19 support website can be found here. It contains guidance on all matters pertaining to the Coronavirus.
