Thousands of small businesses could be missing out on up to £50,000 worth of funding that they aren’t aware they are eligible for.
The government’s new Bounce Back Loan scheme opened on May 4 with UK banks receiving more than 100,000 applications on the first day, and many businesses receiving funds in 24 hours.
Businesses can borrow between £2,000 and £50,000, with no repayments for the first 12 months, and loans being interest free for the first year.
Sean Farnell, a partner at Midlands-based accountancy firm Burgis & Bullock, says many small and start-up businesses he works with aren’t aware they can apply for these loans.
Businesses assume that eligibility for the loans is the same as with the Coronavirus Business Interruption Loan Scheme loans where firms have to show they would be trading viably were it not for the pandemic, but this isn’t the case, as businesses already ‘in difficulty’ can apply for the funding.
This means that businesses with a negative balance sheet can apply, provided they haven’t received £177,000 of state aid.
Sean said: “Thousands of businesses will be missing out on this because they simply aren’t aware that they are eligible.
“The Bounce Back Loan Scheme criteria opens the loans up to the vast majority of SME businesses that run with very lean or negative balance sheets.
“Many smaller businesses operate with little or negative assets, often due to directors financing via personal loans and credit cards.
“They wouldn’t have been eligible for the CBILS loan, but they are now eligible for the Bounce Back loans.
“It will have a massive impact on small businesses around the country. It could really be a game-changer.
“It buys breathing space for businesses so hopefully by next summer, when the economy starts to pick up more quickly, they will be in a position to start making repayments.”
Sean says the Bounce Back Loan scheme has been well received by businesses so far.
“The good news is we are seeing money coming through in 24 hours. It’s working and it’s a lot easier than CBILS,” added Sean.
“We’ve had a lot of cases where businesses have taken six weeks to be declined a CBILS loan. In comparison, with the Bounce Back loan scheme they have cash in their bank account within a day of applying.
“There will be an awful lot of businesses that are assuming they aren’t eligible when in actual fact they are.
“These businesses are vital to the ongoing recovery of the economy and the ability to access this finance will be a literal lifeline to these businesses.”
Burgis & Bullock, which has offices in Leamington Spa, Nuneaton, Rugby and Stratford-upon-Avon. Find out more about the firm at www.burgisbullock.com
Caption: Sean Farnell, a partner at Midlands-based accountancy firm Burgis & Bullock