- No interest will be charged and no repayments will need to be made in the first 12 months.
- After 12 months, all banks will charge a fixed 2.5% annual interest. This is far cheaper than a typical personal loan.
- You can repay the loan early without penalty. Or with some banks you can part-repay or overpay.
- The loans are set up to last for six years. So that’s a year interest-free and the rest at 2.5%. However, as you can repay at any time that gives you flexibility, of course, the sooner you repay once interest is charged, the smaller the overall cost.
- The loans are unsecured. While this sounds bad, it’s actually good. Secured loans include mortgages, where they can take your home if you don’t repay. Here you don’t give security (the Government does) so it’s far more difficult for them to take your assets if you can’t repay.
- Your business must have been established before 1 March 2020. It must also still be trading as a going concern (temporary cessation due to coronavirus doesn’t matter) at the point of application – and the reason for any issues must be due to coronavirus.
- Credit ratings (business or personal) won’t impact your eligibility – so most should be able to get these loans. You don’t need to prove the viability of your business and the application process is relatively straightforward.
- The loan will likely go on your business credit report, but not on your personal one (though banks may do ‘soft’ credit checks on both).
- Official lenders. See bank list.
- You need a business to set these up but don’t need a business bank account. At least some of the banks offering these loans don’t require you to have a business account with them.
- Bounce back loans DON’T affect your eligibility for other Government personal support. You can still apply for a bounce back loan and get the self-employment income support grants, and you may still be eligible for universal credit.
- Bounce back loans can be used to repay existing finance. We’ve confirmed this with a number of individual lenders. We’re still checking whether there are any that have specific terms to prevent it.
Source HMRC, British Business Bank