Sunak announced that the deadline for new applications to the government’s state-backed loan schemes will be extended until 30 November 2020, and the government is starting work on a new guarantee loan programme to begin in January.
He also premiered a “pay as you grow” initiative to help companies repay state-backed business loans. The government will give all businesses that borrowed under the Bounce Back Loan Scheme the option to repay their loan over a period of up to ten years, reducing their average monthly repayments on the loan by almost half. UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments). The government will also allow Coronavirus Business Interruption Loan Scheme lenders to extend the term of a loan up to ten years.
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What you need to know
The BBLS provides lenders with a government-backed guarantee of 100% to offer loans of up to £50,000 to businesses across the UK that are losing revenue as a result of the COVID-19 outbreak. The government will cover the cost of any fees and interest for the borrower for the first 12 months and no repayments will be due during this period to enable firms to get back on their feet. This grace period is then followed by 60 monthly repayments of the amount borrowed plus interest at 2.5% p.a. (fixed) with early repayment permitted. BBLS is administered by the British Business Bank and made available to businesses via accredited lenders. It is currently open until 4 November 2020. Key features of the scheme
A business must confirm:
Ineligible businesses and sectors: Banks, building societies, insurance companies; the public sector including state-funded primary and secondary schools; or an individual other than a sole trader or partner acting on behalf of a partnership. Additional features to be aware of: A business will be subject to standard checks such as customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. A lender may require other information eg self assessment tax returns. Some of the usual consumer protections do not apply, including those under the Consumer Credit Act 1974. For additional guidance, please see the FAQs for Small Businesses: Bounce Back Loan Scheme |
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