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Chancellor increases coverage for SMEs with new 100% guaranteed loans.

A new scheme providing loans up to a maximum of £50,000, or 25% of turnover has been announced by the UK Government. The new ‘Bounce Back loans’ will sit alongside existing Government support for small businesses, such as the existing Coronavirus Business Interruption Loan Scheme (CBILS).

The new loans will be 100% guaranteed by the Treasury, with no interest to pay for the first 12 months.

The Bounce Back loans will be delivered through a simple fast track application system, with the Government saying, that for most businesses, payments should arrive 24 hours after application. The loans will not require a business viability test, will have simpler eligibility criteria than CBILS and will be applied for through a short online form.

The scheme will launch on Monday 4 May and be delivered by a network of accredited lenders. There will be no interest on the loan for the first 12 months and the Government will work with lenders to agree a low rate of interest for the remaining period of the loan, which can be up to six years.

Businesses will be eligible to apply if they are a small or medium business negatively effected by the impacts of COVID-19, based in the UK and were not an ‘undertaking in difficulty’ on 31 December 2019.

In a statement in the House of Commons the Chancellor also said that the Government will make additional changes to the CBILS scheme, including removing the per lender portfolio cap for the government guarantee, and changing the viability tests that so that all banks will need to assess is whether a business was viable pre COVID-19, not during the crisis.

Please note, businesses cannot apply for both a Bounce Back loan and a loan through CBILS.

Over the past weeks techUK has raised with Government numerous cases where SMEs in the tech sector struggled to access a loan through CBILS. SMEs had been facing difficulties with CBILS as the pre-profit and asset poor but idea rich companies that characterise SMEs in the UK tech sector reported having problems with the CBILS application process, with a large number of companies reporting rejected applications.

However in response to feedback from industry, reforms to CBILS, the creation of the Future Fund, new Innovate UK loans and grants and now the launch of the Bounce Back loans have significantly improved the coverage offered by the UK Government for the tech sector to mitigate the financial impacts of COVID-19.

techUK will continue monitor the implementation of these schemes to ensure that they are effective in their aims and are accessible to a wide range of companies across the tech sector.

For further information and guidance on how to manage the impacts of COVID-19 visit the techUK COVID-19 information hub.