The Coronavirus Bounce Back Loan Scheme (BBLS) was set up to help businesses that are impacted by this virus. Last week Chancellor Rishi Sunal announced that the scheme would remain open for applications until 30th November 2020, extending the closing date by almost a month. If you haven’t taken out a Bounce Back Loan for your small business, it may well be worth asking – should you grab the money, before it’s gone?

What is the Coronavirus Bounce Back Loan Scheme?

The Bounce Back Loan Scheme is designed to allow small and medium-sized businesses access to finance more quickly. You can find full details on the Gov.UK website, but here are the key points:

  • Businesses negatively affected by coronavirus can apply to borrow between £2,000 and £50,000.
  • The goverment will guarantee 100% of the loan.
  • No fees or repayments will be charged during the first 12 months.
  • After 12 months, the interest rate will be 2.5% a year.
  • If you have taken out Coronavirus Business Interruption Loan (CBILS) you cannot apply – but you can arrange to transfer your loan to the Bounce Back scheme.

Is the Coronavirus Bounce Back Loan Scheme a good deal?

The short answer is – yes. While you need to consider your business’s specific circumstances, in our opinion the terms of the scheme can offer real opportunity, while helping your business out of lockdown.

In effect, the Gover.nment is making free money available to businesses right now, and then after 12 months it’s repaid at a very low 2.5% interest rate. This is lower than many small business will be able to borrow at, at the moment. The maximum repayment term was also increased last week, up to 10 years.

Together, the low interest rate and the long repayment term make this a very affordable loan.

Should I grab the money before the scheme closes?

Again, you need to consider the circumstances of your business.

It’s not smart to borrow money today, to pay yesterday’s bills, because it may mean there’s a problem with the fundamentals of your business.

So, if paying off the bills is your main reason for taking out the loan, we suggest that you first take a good look at how you’re operating and identify any problem areas or where there is room for improvement.

However, it’s completely different to borrow money to get capital into your business.

For many, business growth is inhibited, because right now they haven’t got the cash to push the business forward. They can’t take advantage of any new opportunites arising from changing customer needs or habits, they can’t reach or retain the customers that they want, and they can’t take the business to where they want to get it to.

The Coronavirus Bounce Back Loan could offer you the capital that you need to drive growth, to adapt, and to move your business to a better place.

Remember the deadline – 30th November

The extension to the deadline for scheme applications means that you have a little bit more time to look closely at the loan, to think carefully about your business’s current position and performance, and to make a decision. The Coronavirus Bounce Back Loan might just be the cash boost you need right now, to take your business to where you want it to be.

Here to help

We’re alternative accountants – rather than a narrow focus on your bookkeeping, we’re able to consider your business as a whole and provide expert advice. If you’re unsure if the Bounce Back Loan is the right move for you then please get in touch – we’re here to help. Call us on 0131 502 0543 or email Hamish.Sheppard@crunchers-edinburgh.co.uk.

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