How do the ‘bounce back’ loans work for small businesses?

May 7, 2020 / Bounce Back Loans

What are the “bounce back” loans?

The bounce back loans are a brand new 100% government backed loan scheme for small businesses that allows them to borrow between £2,000 and £50,000.

The loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form with access to the cash within just a few days.

The scheme has been set up especially for small businesses who may need a vital injection of cash to keep their business going as many struggle through the lockdown measures imposed to help combat the spread of COVID-19.

Small businesses have been hit the hardest during this period, especially those in the hospitality, retail and leisure sectors, with many suffering major cash flow issues and some even going down the liquidation route via a Creditors’ Voluntary Liquidation (CVL).

The Chancellor of the Exchequer, Rishi Sunak, said:

“Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.

This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses.”

Which lenders are taking part in the scheme?

The lenders that are offering small businesses the bounce back loans can been seen on the British Business Bank website here.

How do small businesses apply for the loan?

The scheme launched for applications from Monday 4th May and companies will be able to access these loans through the network of accredited lenders.

So far the scheme is estimated to have lent around £3.3bn to micro-businesses in the UK. And according to, the banks taking part in the Bounce Back Loans scheme have reported an average loan size of £30,000.

Currently, only HSBC is accepting micro-businesses from non-customers. Lloyds, Barclays and RBS are offering the loans to existing customers first because they have already completed anti-money laundering and other checks. So it’s best to check with the lender you already bank with if you’re looking to get the loan.

How do you check whether you’re eligible?

  • You must be UK-based and established by March 1st 2020
  • Your business must have been adversely impacted by the Coronavirus (COVID-19)
  • You must confirm you are currently not using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility)
  • You must not be in bankruptcy, liquidation or undergoing debt restructuring

Advice for struggling small businesses 

Despite what is being said by the Government and the banks, a lot of company owners are not finding it very easy to secure loans with reasonable terms (e.g. low interest rates, without needing a Personal Guarantee).

Also, it is important to remember that if you are taking up any loans, they will need to be repaid. They are not gifts. So, you will have to take the repayments into account when you are doing your financial forecasts.

For a lot of companies, borrowing additional money down is just getting them deeper and deeper into trouble. Liquidating the company now can be a better option.

If your company is having cash flow problems, we can give you with free, no obligation advice to see what is the best for you. 

Contact us on 0161 907 4044 or for more information.