New UK bank scheme leads to 100,000 loan applications on first day

Wednesday 6 May 2020 14:30 CET | News

UK-based banks have received around 100,000 applications in a single day after The Bounce Back Loans scheme for small businesses was released.

The Bounce Back Loans scheme went live on May 4, 2020, with Barclays seeing 200 applications in the first minute and Lloyds 5,000 within three hours. It offers loans up to GBP 50,000 and is designed to be simpler and quicker than the existing Coronavirus Business Interruption Loan Scheme (CBILS).

To qualify, a business must have been trading on March 1, 2020, and not have been in financial difficulty. Thus, the loans are not intended to bail out failing businesses. The government will cover the cost of fees and interest for the first year. Businesses will only begin repaying the loan after 12 months. All lenders will charge a flat rate of 2.5% and the loans will last up to six years.

This bounce-back rate is likely to be lower than most CBILS as they are less risky. The government is guaranteeing 100% of the loan from lenders if the business defaults. With CBILS, the guarantee is 80% of the money. Both the Treasury and banks are keen to emphasise that they are loans that need to be repaid. The tax authorities have promised a close inspection of all loans given.

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Keywords: UK bank scheme, the bounce back loans scheme, small businesses, loan application, Barclays, Lloyds, CBILS, coronavirus
Categories: Banking & Fintech
Countries: United Kingdom
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Banking & Fintech

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