New 100% government-backed loans offer a lifeline to small businesses

A new 'bounce back' loan scheme makes £2,000-£50,000 quickly available to small firms to help them recover from the lock-down.

The government has introduced a new 100% backed 'bounce back' loan scheme for smaller businesses. It is for loans of between £2,000 and £50,000.

There will be no interest or repayments to be made for the first 12 months and the government says it will work with lenders to agree a "low standardised level of interest" for the remaining period of the loan after that.

Announced yesterday (27 April) by Chancellor Rishi Sunak and to be launched on Monday (4 May), the loan is intended to be quick and easy to apply for using an online form, with the cash available within days. Click here for how to apply.

It is being called the 'bounce back' loan because it is intended to help companies suffering a temporary cash flow problem to bounce back from the coronavirus lock-down.

Smaller companies have found it difficult to get the earlier 80% government backed loans from banks because the banks have been keener that directors should put their houses on the line. The 'bounce back' loan promises to be more accessible, although you cannot apply for it if you are already applying for the Coronavirus Business Interruption Loan Scheme (CBILS).

The government says it consulted extensively with business about the design of the new scheme.

The Chancellor said yesterday: "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."