Bounce back loans - Bounce back or Roll forward

The new government loan scheme “Bounce back loans” was launched by most leading high street lenders. The scheme is aimed to help small and medium sized businesses to borrow between £2,000 and £50,000. Each business’s total loan is capped at 25% of their turnover, to a maximum of £50,000. This doesn’t mean that if your turnover is over £200,000 you cannot apply, it just means that you are capped at £50,000. The loan is 100% government backed and therefore the business owners do not need to provide any additional security to lenders. The loan has a fixed interest rate of 2.5% and there will not be any fees or interest to pay in the first 12 months. The maximum loan term is 6 years – which includes a one year interest holiday and then five years of interest and capital repayments. As an example the monthly repayments due on borrowing of £25,000 would be £444. In summary, these funds are very cheap and act as a fast way for businesses in trouble to raise much needed capital. The scheme also provides business owners access to capital which can be used to invest in new income streams, enabling a much greater return on their investment. It also provides businesses with a cheaper alternative to asset based finance such as hire purchase agreements. Yes, taking on new debt brings risk, but as business owners you must now be thinking forward on how your business can come out of this crisis and be stronger than it was before it went in. Apply for a bounce back loan here. Tom Stone