Extension of Bounce Back Loans and Repayment Holidays

Bounce Back Loans

Estimated reading time: 5 minutes

Bounce back loans have been extended again. The scheme is now open to applications until 31st March 2021.

The scheme now also allows for repayment holidays and other helpful options.

The loans were originally made available back in May 2020. However, if you didn’t claim or are considering increasing your bounce back loan below are some FAQs.

What are bounce back loans?

Bounce back loans are part of the support provided by the government. They are aimed at smaller businesses requiring financial funding.

As they are government backed, the loan will be easier to obtain, with better repayment terms than regular commercial loans.

How much can I borrow?

Businesses can borrow between £2,000 and £50,000. The maximum available to each business is based on 25% of their turnover.

Who is eligible?

The bounce back loan scheme is available to the majority of businesses that were trading on or before 1st March 2020.

The business must be based in the UK, either as a Limited company, partnership or soletrader.

Who is not eligible for the bounce back loan?

The scheme is not available for certain sectors such as banks, building societies, insurance companies and public sector organisations.

Do I have to repay the loan?

Yes. The interest is only covered by the government for the first year.

After 12 months the business will start to repay the loan plus interest in the normal way.

What interest rates will be charged on the bounce back loans?

The rate of interest for this facility has been set at 2.5% per annum.

What terms can the loan be borrowed over?

The bounce back loans are available over a fixed six year period.

However, they can be extended up to 10 years. This option will be made available prior to the first repayment being due.

Do the Bounce Back Loans have interest only repayment options?

Announced on Friday 5th February 2021, the loan can be changed to interest only.

The interest only period lasts for a period of 6 months. This option can be used up to three times.

Can the Bounce Back Loan repayments be delayed?

Yes, this was also announced on Friday 5th February 2021. The repayments can now be delayed for a period of 6 months but only after at least 6 repayments have been made. This option can only be used once.

Do the loans require personal guarantees?

Typically loans provided to businesses require personal guarantees. Under the bounce back loan personal guarantees are not permitted.

For soletraders and partnerships, there can be no recovery of loss against either the principal private residence or the primary vehicle.

My business is making losses can I still apply?

Any business which was an ’undertaking in difficulty’ as at 31st December 2019, may have restrictions on the amount they can borrow.

There may also be restrictions on how the loan is to be spent.

Can I claim both the Bounce Back Loan and the Coronavirus Business Interruption Loan (CBIL)?

The CBIL was a government backed loan scheme announced earlier in the spring of 2020.

Businesses which have received support via the CBIL will NOT be able to claim the bounce back loan.

It is possible to convert the CBIL into the bounce back loan. The schemes are different, so it is important to discuss this with your lender.

When will bounce back loans be available?

Businesses can apply for the loans now.

The scheme is currently set to close for new applications on 31st March 2021.

Can businesses increase the amount borrowed on a bounce back loan?

Yes. If you already have a bounce back loan but didn’t take out the maximum available, it can be increased.

The top-up of the loan must be requested by 31st March 2021.

How long will it take to receive the funding?

The scheme has been set up so that businesses can access the funding as quickly as possible. As a result, it is expected to be processed within a matter of days.

Banks are still required to carry out certain checks, so we recommend that you apply with your current bank. As this will be faster.

How do I apply for the bounce back loan?

The quickest way to apply is to go direct to your bank.

Here is a list of the approved lenders and links to each bank

TIP: Be careful of scams. If you receive emails or phone calls claiming to offer loans, be careful that it is not a scam. In case of any doubt speak with your accountant or professional advisor.

What to do if your application for a bounce back loan is rejected?

If the lender turns you down, you can apply to other lenders offering bounce back loans. See the approved list above.

Government Support Extended

The following blogs all contain Government Support which have been extended due to the second lockdown:
Furlough Scheme Extended from November 2020 to March 2021
Self-Employment further grants payable on 30th November 2020
Business grants available for those with premises

Other Government Support available includes:
The blogs below relate to the original Government Support. As a result some of these may no longer be available.
Job Retention Scheme – see our step by step guide on how to apply
Self-Employed Grant – use our calculator to see how much you can claim?
Business Support Grant – those who have business premises can claim £10k
Defer Personal Tax payments
Defer your VAT liability

DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer

Scroll to Top