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Business Covid-19 Finance

What is a bounce back loan?

The coronavirus pandemic is hitting the UK hard; with lockdown restrictions putting a stop to many business operations throughout the country and many people unable to work or earn a living, we are living in unprecedented times.

The Chancellor, Rishi Sunak, has unveiled an impressive package designed to support businesses and individuals throughout the country due to the economic impact of the coronavirus. One of the most important forms of aid is no doubt the Bounce Back Loan, which will help thousands of struggling businesses to stay afloat this year.

Bounce Back Loans for UK Businesses

Small businesses across the UK can now benefit from the government’s recently launched Bounce Back Loan. The loan is intended to aid small businesses who are struggling due to the current crisis and need a quick loan to tide them over until business is more profitable.

The Bounce Back Loan is intended to be fast and easy-access, making it simple for small business owners to apply and receive the money within just days; it also offers a flat rate interest fee of 2.5%, making it an attractive choice for businesses in need. The government has also promised to cover the cost of any fees or interest for the loan for the first 12 months through Business Interruption Payments (BIP). It’s hoped that the government-backed loans will allow many businesses to weather the coronavirus pandemic despite having to postpone operations.

How do I apply for a Bounce Back Loan?

You can apply for a Loan if you run a business which is based in the UK and has been affected by the coronavirus crisis. Applying for a Bounce Back Loan is quick and easy, with the application process available to complete online; you can go to the British Business Bank website (https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/) to find accredited lenders offering the loan.

There are a few restrictions on the Bounce Back Loan that businesses should be aware of before applying. Businesses that have already taken out a Coronavirus Business Interruption Loan of up to £50,000 may not take out a new Bounce Back Loan, but they can switch their loan to this scheme if desired. To be eligible for the loan, business owners must also self-declare that the business was not a business in difficulty as of 31 December 2019, in order to prove that aid is only needed due to COVID-19.

How much can I borrow?

The amount available to borrow as a Bounce Back Loan depends upon the value and turnover of your business. Six-year term Bounce Back Loans are available from just £2,000 all the way up to £50,000; the total value of a Bounce Back Loan may be no more than 25% of the business’ turnover, which means to apply for the maximum loan your business’ annual turnover must be £200,000 or higher.

What is the application process?

As it’s designed to be simple and fast, the process for applying for a Bounce Back Loan is very easy. No matter which lender you choose, the application form will only ask seven questions, and you will need to self-certify that your business is eligible for the loan under the Bounce Back Loan Scheme. Your business will then be subject to the relevant checks, including the Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. The lender will then make a decision on your application within the next few days; accepted applicants for the Bounce Back Loan should receive cash within just a few days of applying.

If you are turned down for the Bounce Back Loan, you can still approach another lender for the loan.

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Business Covid-19 Finance Money

Making loan repayments during Covid-19, what are your options?

Covid-19 has left everyone in very uncertain financial situations – with economies around the world all but grinding to a halt, it can be difficult to know where the next penny is coming from. Managing your finances is of the utmost importance, but what can you do when the rest of the world is in trouble too?

There are options for you, however, during the Covid-19 crisis, to keep your finances as buoyant as possible.

Keep making your payments

If you haven’t been impacted by the difficulties surrounding Covid-19, it’s essential that you keep making your payments as regularly as possible. You might start thinking about deferring payments and putting more money aside for a rainy day, but the truth is your money right now is more essential and better served flowing through the economy rather than sitting dormant. Businesses that are still open are relying on repayments from those who can afford it, so they can better help those who cannot afford it. Keeping your payments consistent is highly important – as everyone stops paying altogether, the situation is only going to be worse for longer.

It can be hard to keep paying when those around you are not, but not being able to pay your bills is a serious tax on mental health, so you are still in a desirable position, even if you are still paying your bills.

arrange a payment holiday

If your ability to earn has been damaged – whether you have lost your job, your place of work is closed indefinitely, or you are unable to sustain your self-employed client base, your only option is to try and arrange a payment holiday from your lender. A payment holiday is a simple idea – you are unable to make your payments, so your lender agrees with you to either lower your payments in line with what you can afford, or they freeze your payments altogether.

There are different kinds of payment holidays – some involve a freeze period followed by the balance due immediately at the end of that period. Others involve the terms of your contract being extended, so the payments you’re missing now are basically tacked onto the end of your agreement.

If you have made all your payments up to this point, with minimal late payments and late fees, etc, they will be likely to look at your application for a payment holiday in good stead. Similarly, anything you can afford to pay, even if it’s a few pounds a week, is a gesture of goodwill. You might be surprised how willing some lenders are to work with you.

Who can offer you a payment holiday?

The concept of a payment holiday is a broad one, and you can get payment holidays from any lender with whom you have an agreement. For example; mortgage companies, landlords, credit card lenders, car finance companies, phone providers, loan providers, energy and utility companies, and much more.

These are difficult times, and companies understand that some customers are having difficult honouring their commitments through no fault of their own. So pick up the phone and contact the companies and they can help you – don’t let yourself fall behind in silence.