Bounce Back Loan scheme receives 100,000 applications on first day

By James McAllister

- Last updated on GMT

Coronavirus Bounce Back Loan scheme receives 100,000 applications on first day

Related tags Loan Government Small business Banks Coronavirus

Around 100,000 small businesses have reportedly applied for a ‘Bounce Back Loan’ on the first day of the scheme.

According to the BBC​, Barclays bank saw 200 applications within a minute of the scheme going live yesterday morning (4 May); and Lloyds took 5,000 in the first three hours.

The Bounce Bank Loan scheme, which was unveiled by Chancellor Rishi Sunak last week​, are available to the UK’s smallest businesses and give guaranteed access to loans worth 25% of turnover, up to £50,000.

Loans applied for under the scheme will be 100% guaranteed by the Treasury, meaning the Government will take on all the default risk; and interest on the loans will be paid by the Government for the first 12 months.

The Government says the Bounce Back Loans have been designed to allow smaller businesses easier access to funds while the Coronavirus crisis is ongoing. 

Applications do not require forward-looking tests of business viability, and there is no complex eligibility criteria that applicants have to meet.

However, while the affordability checks are lighter, UK Finance chief executive Stephen Jones has told the BBC​ that firms should still "think very carefully about their ability to repay the loan”.

Despite the Government guarantee, banks are required to first chase firms for money if they do not repay the loan, which could include seizing assets, and pursuing business owners through the courts.

"These are loans, not grants,” says Jones.

“If a business is already indebted and taking on further debt, they should think carefully before making an application.”

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