Decoding Growth Loans: A New Avenue for UK's Small Businesses

Discover how growth loans, such as the Bounce Back Loan Scheme (BBLS) in the UK, are providing a financial lifeline to small and medium-sized businesses impacted by the coronavirus pandemic.

By: Liza Pringle
Published: 12:24 PM, Jun 20, 2023

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Photo by PiggyBank on Unsplash

Growth loans have emerged as a significant financial tool for small and medium-sized businesses, particularly in the wake of the coronavirus pandemic. In the UK, the government introduced the Bounce Back Loan Scheme (BBLS) to enable smaller businesses to access finance more quickly during these challenging times. This article will decode the BBLS and its impact on UK's small businesses.

Understanding the Bounce Back Loan Scheme (BBLS)

The BBLS helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. The government guarantees 100% of the loan, and there won’t be any fees or interest to pay for the first 12 months. After 12 months, the interest rate will be 2.5% a year. The scheme was open to applications until 31 March 2021.

Eligibility for BBLS

To apply for a loan under the BBLS, your business must be based in the UK, established before 1 March 2020, and have been adversely impacted by the coronavirus. Businesses from any sector can apply, except banks, insurers and reinsurers (but not insurance brokers), public-sector bodies, and state-funded primary and secondary schools.

The Loan Terms

The length of the loan under the BBLS is six years, but you can repay early without paying a fee. No repayments will be due during the first 12 months. Before your first repayment is due, your lender will contact you about further options to extend the term of your loan to 10 years, move to interest-only repayments for a period of 6 months (you can use this option up to 3 times), or pause your repayments for a period of 6 months (you can use this option once).

How to Apply for BBLS

There are 29 lenders participating in the scheme, including many of the main retail banks. You should approach a suitable lender yourself via the lender’s website. The lender will ask you to fill in a short online application form and self-declare that you are eligible. The lender will decide whether to offer you a loan or another type of finance, and you’ll be responsible for repaying 100% of the amount borrowed.

In conclusion, the BBLS has provided a much-needed financial boost to small and medium-sized businesses in the UK during the coronavirus pandemic. As we move forward, it will be interesting to see how these businesses utilise this financial support to bounce back and drive growth.

Liza Pringle

Liza Pringle is the dynamic force behind Enable Funding, a platform dedicated to providing in-depth insights into the UK's venture capital scene, growth companies, and asset management landscape. As the founder and editor, Liza leverages her extensive experience in finance and investment to empower businesses and investors with the knowledge they need to make informed decisions and drive growth.

With a career spanning over two decades in the financial sector, Liza has a wealth of experience in venture capital, asset management, and financial consulting. She has worked with a diverse range of clients, from startups to established corporations, helping them navigate the complex world of investments.

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