CCR2 Business continuity
The right bounce?
Government-back commercial loans may yet be failing to meet their targets because of a lack of publicity
Sean Farnell Partner, Burgis & Bullock
Thousands of small businesses could be missing out on up to £50,000 worth of funding that they are not aware they are eligible for. The government’s new Bounce Back
Loan scheme opened on 4 May with UK banks receiving more than 100,000 applications on the first day, and many businesses receiving funds in 24 hours. Businesses can borrow between £2,000
and £50,000, with no repayments for the first 12 months, and loans being interest free for the first year.
This means that those businesses with a
negative balance sheet can apply, provided they have not received £177,000 of state aid.
Missing out Thousands of businesses will be missing out on this because they simply are not aware that they are eligible. The Bounce Back Loan Scheme criteria
opens the loans up to the vast majority of SME businesses that run with very lean or negative balance sheets.
economy starts to pick up more quickly, they will be in a position to start making repayments.
Well received The Bounce Back Loan scheme has been well received by businesses so far. The good news is we are seeing money coming through in 24 hours. It is working and it is a lot easier than CBILS. We have had a lot of cases where
businesses have taken six weeks to be declined a CBILS loan. In comparison, with
Many smaller businesses operate with little or negative assets, often due to directors financing via personal loans and credit cards. They would not have been eligible for the CBILS loan, but they are now eligible for the Bounce Back loans
Not aware The small and start-up businesses we work with are not aware they can apply for these loans. Businesses assume that eligibility for the
loans is the same as with the Coronavirus Business Interruption Loan Scheme (CBILS) loans where firms have to show they would be trading viably were it not for the pandemic, but this is not the case, as businesses already ‘in difficulty’ can apply for the funding.
32 Many smaller businesses operate with
little or negative assets, often due to directors financing via personal loans and credit cards. They would not have been eligible for
the CBILS loan, but they are now eligible for the Bounce Back loans. It will have a massive impact on small
businesses around the country. It could really be a game-changer. It buys breathing space for businesses so hopefully by next summer, when the
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the Bounce Back loan scheme they have cash in their bank account within a day of applying. There will be an awful lot of businesses
that are assuming they are not eligible when in actual fact they are.
Vital These businesses are vital to the ongoing recovery of the economy and the ability to access this finance will be a literal lifeline to these businesses. CCR
June 2020
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