With no official financial support package offered by the government, the loans offer a chance to bolster flagging incomes.
If you are self-employed but fall outside the Self-Employment Income Support Scheme or are a company director mainly paid as dividends, bounce back offers the hope of help.
Bounce back loan terms
Businesses have reportedly filed bounce back loan applications at the rate of 200 a minute with the banks.
In brief, the terms are:
- Landlords can borrow up to 25% of their annual turnover with a minimum of £2,000 and a maximum of £50,000.
- The loans are interest and repayment fee for 12 months, and then interest is 2.5%.
- The loan term is up to six years, but early repayment comes with no penalty.
- Bounce back loans are unsecured for the borrower, with the government underwriting the risk for lenders
- Property businesses must have started before March 1, 2020, must still be trading and in financial difficulty due to coronavirus
- Several banks offer bounce back loans but only HSBC is keen to lend to non-customers
The Treasury has confirmed that the loans are available to the self-employed and company directors spending the cash on working capital or investment.
That includes wages and money to buy or refurbish property. Shareholder or director owed money by a cash-poor company can settle their accounts with bounce back funds paid as dividends.
Why consider bounce back?
If you can get a loan, the borrowing is much cheaper than standard commercial lending, so it is worth paying that off with bounce-back and taking advantage of the generous terms.
Even if you do not need the money, it is free for a year and repayable without penalty.