More than 69,000 bounce back loans for small businesses worth over £2bn have been approved during the first 24 hours of the scheme, the Chancellor has announced
The bounce back loan scheme offering small businesses easy-to-access loans of up to £50,000 officially opened on 4 May, with the cash promised within days.
The seven largest lenders (Barclays, Danske, HSBC, Lloyds, RBS, Santander and Virgin Money) received more than 130,000 Bounce Back Loan Scheme applications on the first day of the scheme.
Thousands of small firms and sole traders are eligible for 100% government-backed bounce back loans of between £2,000 and £50,000 to help them make it through the coronavirus outbreak.
Small business owners can apply to accredited lenders by filling out a simple online form, with just seven questions.
The government has also agreed with lenders that a flat rate of 2.5% interest will be charged on these loans.
Any business that has already taken out a coronavirus business interruption loan (CBIL) of £50,000 or less can apply to have this switched over to this new scheme.
The government will provide lenders with a 100% guarantee and cover the cost of any fees and interest for the borrower for the first 12 months. No repayments will be due during this period to enable firms to get back on their feet.
The loans are available through a network of lenders, including the five largest banks.
Eligible companies will be subject to standard customer fraud, anti-money laundering (AML) and know your customer (KYC) checks prior to any loan being made.
Some state aid restrictions may apply to application, the government said, and pointed out the borrower always remains 100% liable for the debt.
Mike Cherry, national chair of the Federation of Small Businesses, said: ‘We know many small firms have struggled to secure small loans speedily.
‘We are pleased that the Chancellor has listened, and swiftly developed this new scheme for small businesses to access finance quickly, interest-free for the first year and at an affordable fixed interest rate for the remainder.’
Rob Hattrell, vice president of eBay UK, said: ‘While the existing CBIL scheme may be appropriate for some businesses, our smallest businesses told us that they were finding it hard in practice to access this support from banks.
‘By extending the current government guarantee from 80% of each loan to 100%, we hope this will make it more likely that banks will extend finance at a critical time.’