Tens of thousands of small firms and sole traders have applied for and remain eligible for the 100% government-backed Bounce Back Loans to help them make it through the coronavirus outbreak.
The government has agreed with lenders that an affordable flat rate of 2.5% interest will be charged on these loans. Any business that has already taken out a Coronavirus Business Interruption Loan of £50,000 or less can also apply to have these switched over to the new scheme.
More than 69,000 Bounce Back Loans worth over £2 billion were approved during the first 24 hours of the scheme. The seven largest lenders (Barclays, Danske, HSBC, Lloyds, RBS, Santander and Virgin Money) received more than 130,000 Bounce Back Loan Scheme applications on the first day of the scheme on Monday.
The Bounce Back Loan scheme is the latest step in a package of support measures launched by Chancellor Rishi Sunak – with £7.5 billion already awarded in business grants, 4 million jobs supported through the job retention scheme and tax deferrals supporting hundreds of thousands of firms.
The Chancellor of the Exchequer, Rishi Sunak, said: “Small businesses will play a key role creating jobs and securing economic growth as we recover from the Coronavirus pandemic.
“The Bounce Back loan scheme will make sure they get the finance they need - helping them bounce back and protect jobs.”
Business Secretary Alok Sharma said: “We are backing small businesses, which are the backbone of our communities, with the support they need to stay afloat.
“This new scheme of 100% government-guaranteed loans gives owners of even the smallest businesses the confidence and flexibility to borrow a sum which works for them. This will help ensure they can continue to trade, and be a key part of our efforts to reboot the British economy.”
As part of the scheme, small businesses can borrow between £2,000 and £50,000. The government will provide lenders with a 100% guarantee and cover the cost of any fees and interest for the borrower for the first 12 months. No repayments will be due during this period to enable firms to get back on their feet.
Mike Cherry, National Chair of the Federation of Small Businesses, said: “We know many small firms have struggled to secure small loans speedily. We are pleased that the Chancellor has listened, and swiftly developed this new scheme for small businesses to access finance quickly, interest-free for the first year and at an affordable fixed interest rate for the remainder.”
To apply, see further information about the Bounce Back Loan scheme here.
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