Bounce Back Loans: Everything You Need to Know for Your Small Business

Small businesses make up over 90 percent of Western economies, employing millions of people every year and generating significant revenue across industries.

However, the coronavirus pandemic has changed things rapidly, especially in the UK. Many SME business owners have had no other option than to furlough employees or drastically reduce their working hours, while others have officially closed their doors, unable to gather the resources necessary to stay afloat.

To safeguard business activities across the country, UK chancellor Rishi Sunak has announced a new Bounce Back Loan scheme, through which business owners can receive some funding during the pandemic.

He said: “These loans will help [business owners] bounce back from this crisis, getting money fast. […] It’s vital this speedy progress continues in the days and weeks ahead.”

This new scheme comes after the previous emergency loan system issued by the government – the Coronavirus Business Interruption Loan Scheme (CBILS) – was met with harsh criticism, as business owners experienced technical difficulties in the application process and delays in receiving the money once their loan was approved.

Here’s everything you need to know about the scheme, including how to apply and what to use the funds for.

How do I know if I can apply?

According to government guidelines, businesses of any size can get access the loans, however, this does not include banks, insurance companies, public sector groups and state-funded primary and secondary schools.

If your business doesn’t reside within the excluded categories, you must meet the following criteria to be eligible for the loans:

• Your activity wasn’t in financial trouble on December 31 2019
• You were trading before March 1 2020
• Over half of your income as a business owner comes from trading
• Your business has been negatively affected by lockdown measures
• Your business isn’t already bankrupt or in liquidation
• You haven’t already been approved for the CBILS, unless you intend to use Bounce Back Loans to pay back the other loan

How much money will I get?

If you get approved, you’ll received 100 percent government-backed loans worth up to £50,000, capped at 25 percent at an interest rate of 2.5 percent. The first 12 months are payment and interest free.

What can I use the money for?

Depending on what you trade in, you’ll be able to use the loans to pay off different expenses. Examples include paying staff salaries, paying off existing loans (such as the CBILS), paying suppliers/distributors, paying bills (such as utility bills) and maintaining a healthy cashflow.

How can I apply?

There are currently 11 lenders participating in the Bounce Back scheme, which you can find on the government’s website.

You should apply through the bank you opened your business’ account with. You’ll be required to fill in a short online form which will collect details about your business such as taxes and turnover rates, as well as specific information on how the lockdown has affected your trading activities. Background checks will also be conducted, such as Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.

The scheme will be available until November 4 2020.

A key thing to remember is that you’ll have to repay these loans during or after the crisis, so do take that into consideration.

As Stephen Joes, chief executive of banking industry organization UK Finance, said: “While businesses only need to fill in a simple form online to apply, it’s important to remember that this type of finance is debt, not a government or bank grant, and will need to be repaid by the borrower over the six-year term of the loan.

“All businesses should consider carefully their repayment obligations before completing a bounce back loan application. Under the terms of the scheme lenders are required to seek to recover any unpaid interest and principal on bounce back loans from borrowers.”

Read more about Covid-19

Coronavirus Student Hub

Everything Students Need to Know About the Novel Coronavirus

Confused About Coronavirus? Imperial College Launches Free Covid-19 Course

Wharton Offers Course on Consequences of Coronavirus Crisis

Discovering where to study

Is Postgraduate Education Still Worth It During a Global Recession?

Cambridge University: Online Only Lectures Until Summer 2021

Imperial College Business School Holds Virtual MSc Information Session

What to Consider When Comparing Universities Online

How to Choose a Business School Without Leaving the House

Comparing Virtual Tours of Top Business Schools

Why Higher Education is Still Necessary in Times of Change

How Can I Still Study Abroad?

Why Technology Can Save University Enrolment in Trying Times

QS digital events

QS Digital Events Calendar

How to Prepare For a QS Digital Event

How to Impress MBA Recruiters at Home

How to Navigate Your University Search During Covid-19

Why Aspiring Grad Students Should Attend HE Events

Coronavirus Advice for In-Person QS Events

Admissions advice

University Admissions: Coronavirus Hub

Business School Admissions: Coronavirus Hub

How Will the New Clearing Process Affect Students?

‘We’re Working to Ensure Candidate Applications Aren’t Disrupted’: Instagram Live with Imperial College Business School

Universities Changing Tuition Fees in Response to Coronavirus

How Covid-19 Is Affecting Wharton MBA Applications

Online Resources to Use in Your MBA Application

UK Government to Cap University Admissions: Will You Be Affected?

How To Defer Your University Offer In the UK

How To Defer Your University Offer In the US

How to Defer Your University Offer in Canada

How To Defer Your University Offer In Australia

Wharton Holds First Virtual Campus Tour For Students Stuck at Home

Entrance tests & exams

Six Tips to Ace the At-Home GRE and GMAT

INSEAD Accepting Applications Without the GMAT Due to Coronavirus

Can't Take TOEFL? Duolingo Might Offer Alternative

How to Take the GRE and GMAT at Home

China's National University Entrance Exam Will Go Ahead in July

Studying online

80% of UK Students Struggling Financially Due to COVID-19

Business As Usual: ESCP Replaces In-Person Project With Online Version

Why Coronavirus Will Cause an Ed-Tech Boom

Should UK Students Get A Refund For The Academic Year?

Majority of International Students Happy to Study Online

Benefits of Online Degrees, According to Students

How to Successfully Work From Home

How to Organize Your Routine When Working From Home

How to Set Up Your Home Office When Studying Your MBA

How to Stay Focused When Studying Your MBA at Home

How to Stay Engaged While Studying Online

75 Percent of Students Expect Lower Tuition Fees For Studying Online

9 Top Universities Offering Free Online Courses

Why Hybrid Teaching Might Be the Future of Online Courses

UK Students Will Pay Full Tuition Fees If Classes Remain Online, Say Government

10 Online Courses to Boost Your Business Curriculum

Life in lockdown

Quiz: Which Quarantine Cliché Are You?

Meet the Charity Helping International Students Left Homeless By COVID-19

Re-opening Businesses in COVID-19: Pros and Cons

What It’s Like Being in B-school During the Covid-19 Pandemic

Life Under Quarantine: How Coronavirus is Affecting University Students

Coronavirus: Life is Changing on Campus in the United States

25 Productive Things To Do While Social Distancing

Five Inventive Things B-School Students Can Do While Social Distancing

How to Keep Employee Morale High While Working From Home

How UK Students Can Help Out During the Coronavirus Crisis

9 Books All B-School Candidates Should Read While Social Distancing

How to Avoid Back Pain When Working From Home, According to a Chiropractor

Business School Professors Recommend Activities to Pass the Time in the Pandemic

Staying healthy

Five Ways to Look After Your Mental Health in Lockdown

How Can Students Stay Healthy At Home?

Should You Try to ‘Improve Yourself’ in Quarantine?

Fun and Unusual Ways Students are Staying Active in Quarantine

How You Can Stay Happy and Healthy While Studying at Home

Careers advice

The 'New Normal': Why Digital Skills Matter More Than Ever

The EdTech Sector Grows as Other Industries Take a Hit from the Coronavirus Crisis

Bounce Back Loans: Everything You Need to Know for Your Small Business

Staying Hopeful: MBA Grads on Job Hunting During a Recession

What Does Coronavirus Mean For The Hospitality Industry?

How to Adapt Your Small Business During a Pandemic

How to Get Hired Without Leaving the House

How 2020 Graduates Can Find Jobs Amid Coronavirus

Everything Students Need to Know About Virtual Internships

Staying Afloat: UK Small Business Owners on Adapting to a Pandemic

How My B-School Experience Is Helping Me Run a Hospital During Covid-19

Summer Internships Are Going Online

Safeguarding Talent During Coronavirus: Will Internships Go Digital?