British Business Bank announces new lenders under the bounce back loan scheme for smaller businesses

  • Allied Irish Bank (GB)/AIB (NI), The Co-operative Bank and Starling Bank to join existing Bounce Back Loan Scheme accredited lenders
  • Onboarding of new lenders continues at pace

Today the British Business Bank has announced that it has approved three new lenders for accreditation under the Bounce Bank Loan Scheme. The scheme is intended to target small and micro businesses in all sectors[1], with loans from £2k up to 25% of the business’ turnover with a maximum loan of £50k.

Allied Irish Bank (GB)/AIB (NI)[1], The Co-operative Bank and Starling Bank join TSB who were also accredited this week. They will be able to provide financial support to smaller businesses across the UK that are losing revenue and seeing their cashflow disrupted, as a result of the Covid-19 outbreak.

Following their approval, these three lenders will be putting in place the operations required to start lending under the scheme and will confirm shortly the dates from which they will be ready to start receiving Bounce Back Loan Scheme applications from smaller businesses across the UK.

All lenders accredited under the Coronavirus Business Interruption Loan Scheme (CBILS) have been invited to become accredited to offer loans under the terms of the Bounce Back Loan Scheme. The British Business Bank is working at pace to accredit those lenders who want to provide lending under the scheme to further extend its reach and provide more choice for smaller businesses.

Keith Morgan, CEO, British Business Bank, said: “There has been incredible demand from smaller businesses for Bounce Back Loans since the scheme launched this week. Onboarding lenders with the capability and means to deliver the scheme rapidly means that more UK smaller businesses will be able to access the finance they need to get through the current pandemic.”

The Bounce Back Loan Scheme has previously accredited 11 lenders. These are Bank of Scotland, Barclays, Clydesdale Bank & Yorkshire Bank, Danske Bank, HSBC, Lloyds Bank, NatWest, Santander, TSB, RBS and Ulster Bank.

About the Business Bounce Back Loan Scheme

The Bounce Back Loan Scheme enables businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year. The government will cover interest payable in the first year.

  • Up to £50,000 loan: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
  • 100% guarantee: The scheme provides the lender with a government-backed, full guarantee (100%) against the outstanding facility balance, both capital and interest. The borrower always remains 100% liable for the debt
  • Interest rate: The government has set the interest rate for this facility at 2.5% per annum, meaning businesses will all benefit from the same, low rate of interest.
  • Interest paid by government for 12 months: The government will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs.
  • No principal repayments for first 12 months: Borrowers will not have to begin principal repayments for the first 12 months, thereafter capital will be repaid on a straight line basis with interest.
  • No fee for businesses or lenders to access the scheme
  • Finance terms: The length of the loan is for six years but early repayment is allowed, without early repayment fees.
  • No personal guarantees: No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle.

Eligibility criteria

Businesses from all sectors[2] can apply for a facility. The certifications which an applicant must provide to its lender:

  • Confirmation that it is UK-based in its business activity, and established by 1 March 2020
  • Confirmation that it has been adversely impacted by the Coronavirus (Covid-19)
  • Confirmation it is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility)
  • Confirmation that it is not in bankruptcy, liquidation or undergoing debt restructuring

How to apply

Businesses should check the British Business Bank website to find out which lenders provide Bounce Back Loans.

Businesses will be required to fill in a short online application form on their lender’s website, which self-certifies whether they are eligible for a Bounce Back Loan facility. Eligible businesses will be subject to appropriate customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. Some State aid restrictions may apply to applications.

Author: Laimis Bilys

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