April 28, 2020

How our Bounce Back Loans will boost small businesses affected by coronavirus

Our approach to the economy has been one of the most comprehensive of any country in the world. Working closely with the Bank of England, charities, banks, business groups, trade unions and more, we have developed a plan that will protect public services and businesses during the coronavirus pandemic.

Our interventions in the economy has been focussed on helping businesses get through the crisis. That’s because we’re aware that some businesses don’t want to take on loans in these times.

However, for many businesses, loans are part of the answer. So this week the Chancellor has announced a new micro-loan scheme to provide a simple, quick, easy solution for those who need a small cash injection.

What is a Bounce Back Loan?

The bounce back loan scheme lets businesses apply for a loan of up to 25% of their annual turnover, up to a maximum of £50,000, with the Government paying the interest for the first twelve months.

These loans will be available from 9am next Monday.  There will be no complex eligibility requirements, no forward-looking tests of business viability. Just a simple, quick, standard form for most businesses to fill in. And loans should arrive within 24 hours of approval.

For this specific scheme, the Government will support lending as well by guaranteeing 100% of the loan for the lender.

These new bounce back loans target that small extra support for those who need it most. And that will support our small business owners get through this crisis.

How businesses reacted to the Bounce Back Scheme

Many businesses and business representatives have already spoken positively of the new scheme. Dame Carolyn Fairbairn, the CBI Director-General, recently said:

“The Chancellor’s new 100% guaranteed loan scheme for small businesses is transformational. Sole traders, micro-firms and entrepreneurs will now have a simple route to fast finance to stay afloat, without red tape or time-consuming checks.

“Thousands of businesses could be saved by this lifeline. Banks now need to continue their work in overdrive to get the loans flowing faster.

“It’s good to see the Chancellor listening to business, proving that where there’s a need to adjust schemes, he will do what it takes. It will be vital to maintain this approach in the months to come. Every job saved today will ensure a faster recovery tomorrow.”

And Mike Cherry, National Chairman of the Federation of Small Businesses, said:

“This crucial new initiative should enable thousands of small businesses to access the working capital they need quickly, helping to protect the millions of jobs they provide in every part of the UK.

This step forward marks another decisive intervention from the Treasury and the Business Department, building on existing support in an innovative way. Swift delivery is now key, and we also look forward to working with government in the long-term to enhance market competition, including that provided by non-bank lenders.

We are pleased to see the Chancellor and the Business Secretary listening to the needs of small businesses, and we will continue to work with them to make sure small firms and the jobs they provide are protected throughout this public health challenge and that small firms are at the forefront of leading the recovery.”

The scheme is simple, easy, quick, and will support businesses stay afloat.

What else we are doing to support businesses through the coronavirus pandemic

The best way to support people during the coronavirus outbreak is to protect their jobs. So supporting businesses is at the core of our economic support to get through coronavirus, and we have put into practice a large number of business support packages to help business owners get through this crisis.

The Coronavirus Job Retention Scheme will protect millions of jobs across the country and is now up-and-running. Around half a million employers have already applied for support with over four million furloughed jobs. Jobs that, otherwise, may have been lost. The HMRC are also on track to deliver the self-employed income support scheme later in June, and detailed guidance has been published this week.

Our packages also mean almost half of all business properties in England will pay no business rates this year. Almost a million business premises can receive cash grants of £10,000 or £25,000, to help them get through the pandemic.

Over 2 million businesses have been offered a VAT deferral, saving them an average of £30,000. Another 2.7 million people will be able to defer their self-assessment payments. And over 20,000 Coronavirus Business Interruption Loans have now been approved.

Our set of interventions in the economy has never been attempted before. But our plans are protecting millions of businesses and people across the country. And they are working.

Many small business owners pour their life and soul into their business, but coronavirus has threatened their very livelihood. That’s why this Government is supporting small businesses throughout coronavirus. Any business who needs support will get it.

The most important thing is to stay at home, protect the NHS, and save lives

Right now, the single most important thing we can do to protect our economy is to protect our health. As the Prime Minister said on Monday Morning, we are making progress in the fight against coronavirus. We are beginning to turn the tide.

But if we lose control of the virus again we risk seeing a second spike. That’s something we all want to avoid.

That’s why it’s so important to continue to follow the Government advice: stay at home, protect the NHS, and save lives. And together, we will get through this.

Region Labour's Pension Tax (£) Extra Months to Work
England 11,167 44
East Midlands 6,150 50
Greater London 12,871 45
North East 9,758 38
North West 6,835 47
South East 14,270 40
South West 7,407 45
West Midlands 10,729 41
Northern Ireland 13,718 35
Scotland 10,653 41
Wales 11,691 36
United Kingdom 11,253 43

Commenting, Therese Coffey, Secretary of State for the Department of Work and Pensions, said:

“Corbyn’s Pension Tax will see ten million savers facing a huge bill forcing them to delay their retirement for almost three and a half years.
“This is just one of the ways a Corbyn government would hammer hardworking people on top of his plans to hike up taxes by £2,400 a year, as well as the cost of his plan for unlimited immigration and the chaos of 2020 being dominated by two more referendums – one on Brexit and another on Scottish independence.
“Only Boris Johnson and the Conservative Party can get Brexit done with a deal, get parliament working again and turbocharge our economy to unleash Britain’s potential.”

Read more about how this Pension Tax will impact millions of savers (PDF)