Bounce Back Loans

The ‘Bounce Back Loan Scheme’ is a new support scheme from the Government, adding to the existing support for small businesses affected by coronavirus.

You can borrow from £2,000 up to 25% of your annual turnover, up to a maximum of £50,000 for up to six years.

For the first 12 months, you won’t pay any interest because the Government will pay it for you. You also won’t have to make any repayments in the first 12 months. There are no fees on a Bounce Back Loan – unlike other loans, you won’t pay fees to arrange the loan, to repay it early or if your repayments are overdue.

For the rest of the term of the loans, you’ll pay interest at 2.5% per year.

Bounce Back Loans are delivered only by lenders accredited by the British Business Bank. The Government provides a 100% guarantee to lenders for all eligible Bounce Back Loans, but you remain liable for all the repayments, as well as the interest after the first year.

The Bounce Back Loan Scheme is separate from but similar to the Coronavirus Business Interruption Loan Scheme. Both loan schemes lend money to businesses via lenders accredited by the British Business Bank.

Small businesses can be eligible for both schemes but the Government launched the Bounce Back Loan Scheme to help small businesses borrow smaller amounts more quickly, and with more generous terms.

Read more from the British Business Bank: What is the difference between CBILS and the Bounce Back Loan Scheme?

If your business is already getting a Coronavirus Business Interruption Loan of more than £50,000, you’re not eligible for the Bounce Back Loan Scheme.

However, if your Business Interruption Loan is for £50,000 or less, you may take out a Bounce Back Loan and use the money to repay your Business Interruption Loan, as long as the money you get from the Bounce Back Loan is enough to pay back the other loan in full.

You may not hold both a Coronavirus Business Interruption Loan and a Bounce Back Loan.

Like all Bounce Back Loans, you won’t pay any interest for the first 12 months because the Government will pay it for you.

After that, the interest rate is fixed at 2.5% p.a.

The maximum you can borrow as a Bounce Back Loan is 25% of your annual turnover in 2019, up to a maximum of £50,000.

If you need more than this, you could apply for a Coronavirus Business Interruption Loan.

Remember, you may only hold one Bounce Back Loan, and with only one lender, and you aren’t allowed to have both a Coronavirus Business Interruption Loan and a Bounce Back Loan.

You’re eligible for a Bounce Back Loan if your business:

• is based in the UK
• was established on or before 1 March 2020
• has been negatively affected by coronavirus
• earns 50% or more of its income from trading
• will use the loan money as working capital or to invest in your business

If your business was an ‘undertaking in difficulty’…
You’re eligible if you certify that taking out a Bounce Back Loan won’t breach state aid rules and that you won’t use the loan for export-related activities.

• If you tell us your business was an ‘undertaking in difficulty’, we’ll ask you to fill in this form about State Aid and send it to our Member Support team.
• Not sure if your business was an ‘undertaking in difficulty’? Use this questionnaire to find out.

You aren’t eligible if your business is:

• a bank, insurer or reinsurer
  (but insurance brokers are eligible)
• a public-sector body
• a state-funded primary or secondary school
• going through a bankruptcy, debt restructuring or liquidation
• receiving or has applied for a Bounce Back Loan from another lender
• already getting a loan from the Coronavirus Business Interruption Loan Scheme.
  However, you can take out a Bounce Back Loan and use the money to repay the Business Interruption Loan in full.

No. You may only hold one Bounce Back Loan, and with only one lender.

It isn’t possible to ‘top up’ a Bounce Back Loan with more money.

It depends. Government rules state that you may only have one Bounce Back Loan.

If you’re a sole trader, this means one per person.

If you’re a Director of a limited company, this means one per limited company or group. Two or more companies form a ‘group’ when one or more are subsidiaries of another, or when your companies come under the same holding company.

If you operate as a sole trader and are also the Director of a limited company, then you may have one for your sole trader business and one for your limited company.

After the first 12 months, your monthly repayments, plus interest, will be deducted from your directly from your primary Tide account. You can see your next repayment date on your Bounce Back Loan dashboard.

To see a breakdown of all your repayments, go into your Tide app and tap More > Bounce Back Loan > Repayment Schedule.

Your repayments will be taken automatically from your Tide account each month. It doesn’t matter if you use another business account for your banking but you must make sure there’s enough money in your Tide account when your repayments are due.

You can make an early repayment tap More > Bounce Back Loan > Make an early repayment. There’s no early repayment fee.

If you no longer need the loan, you can choose to pay it back early, you’ll then pay less interest.

Tap More > Bounce Back Loan > Make an early repayment.

There are no early repayment charges and you won’t pay any interest if you pay the full amount before the end of your initial 12-months. You can also make a one-off repayment, as well as additional payments on a regular basis, and doing so will also help save you money on your interest payments.

If you’re concerned you won’t be able to make a repayment on your Bounce Back Loan, let us know as soon as possible by emailing: collections@tide.co We’ll talk over the options and work out a repayment plan.

We worked with a large number of financial institutions to secure funding to lend through the Bounce Back Loan Scheme.

However, the design of the Government’s Scheme doesn’t meet the requirements of our prospective funding partners to be able to provide the capital for us to lend to you.

Oliver, our CEO, has explained this in full in this letter to members.

No. Tide exists to support small businesses so when, in March, the Chancellor announced support for SMEs in the Budget, we immediately expressed our interest in becoming an accredited lender for the Coronavirus Business Interruption Loan Scheme (CBILS). We pursued this application until the Bounce Back Loan Scheme (BBLS) was announced in April. This scheme is much better suited to our members so we switched our application.

The Bounce Back Loan Scheme is a Government initiative open to all eligible small businesses. We believe it isn’t fair to discriminate against new customers so that’s why any small business owner could apply for an account with us, and if they wished, register interest in getting a Tide Bounce Back Loan.

We’ve gained some new members but in fact almost 90% of the businesses who joined our waiting list were existing rather than new members.

I’ve applied with another lender and they need proof I’m not in the application process with Tide. What can I do?
Message us by email (hello@tide.co) or in the app and we’ll be able to help.

All loans that we provided through the Bounce Back Loan Scheme were funded by us and not the Government. This means we had to raise the money we lent through the Bounce Back Loan Scheme.

The Bounce Back Loan Scheme is 100% guaranteed by the Government. ‘Guaranteed’ means that if the lender doesn’t collect the loan, then the Government has to reimburse the lender. ‘Guaranteed’ doesn’t mean the money is given to lenders by the Government.

Because the Government guarantees the loans, they need to have control over how much all accredited lenders lent to customers.

You can read more about how we tried to raise the capital to lend as Bounce Back Loans in this letter from our CEO to members.

We’re sorry you’re not happy – did you give us a chance to sort it out? Please message us in the app or by email hello@tide.co

We set out our complaints handling procedures and the rights you have to complain to the Financial Ombudsman Service in our Tide Terms.

Read more: FAQ: How do I make a complaint?

The Government has announced Pay As You Grow options for Bounce Back Loan borrowers to help businesses get back to regular trading. Pay As You Grow could give you more time and flexibility to pay back your loan.

Pay As You Grow options will be available to you once you start to repay your Bounce Back Loan, from 12 months after it was first approved, subject to lender’s discretion.

Using these options won’t affect your credit score, though it may influence how we assess your creditworthiness in the future and your loan may cost you more overall.

Read more about What options are available under the Pay As You Grow Scheme?

The options available to you when you are due to make your first payment after 12 months, subject to lenders discretion are:

1. If you expect to be in a better position to repay in the future

a) You could reduce your monthly repayments for six months by paying interest only.

i) This option is available up to three times during the term of your Bounce Back Loan.
OR

b) You could pause repayments for six months.

i) This option is available once during the term of your Bounce Back Loan.

2. If you’re only able to repay a smaller amount:

You could request an extension of your loan term from six years to 10 years at the same interest rate of 2.5%.

If you’re considering this option you should think carefully about your ability to repay over a longer timeframe, taking into account such things as if you intend to cease trading or retire within the revised term of your Bounce Back Loan.

Please note for all three options that the total amount you owe will go up. This is because your interest costs increase as you’re repaying your loan over a longer period.

You can use options 1 and 2 together if you need to.

Offering the Pay As You Grow repayment options are subject to the lender’s policies. We’ll assess each borrowers’ requests on a case-by-case basis. Remember you can always see your repayment schedule in-app, just tap More > Bounce Back Loan > Repayment Schedule.

If you have more questions, tap Support to send us a message – we’ll be happy to help.

Reminder of your Bounce Back Loan terms and conditions

When you applied for your Bounce Back Loan, you declared that you understood that:

• You are fully liable for all repayments, and if you are unable to meet these obligations, this could negatively affect your credit score.
• The 100% government guarantee is provided to cover any losses the lender makes and does not cover any losses that you might suffer if you are unable to meet your payment obligations.
• We would not carry out any affordability checks on your application.

If you’re worried about your finances, the British Business Bank has a range of guidance and resources available to all businesses, including content on managing your cashflow and a list of independent advice services.

In addition, the Government has various options for financial support you can get for your business. Free debt advice is also available from numerous charities and non-government organisations and we’ve linked a UK Finance leaflet that provides practical information and helpful advice to businesses who are facing financial difficulty.

If you’re concerned you won’t be able to make a repayment on your Bounce Back Loan, let us know as soon as possible by emailing: collections@tide.co We’ll talk over the options and work out a repayment plan.

We’re here to help

You can also contact the following organisations for free debt advice:

• Money Advice Service
  0800 138 7777
  https://www.moneyadviceservice.org.uk/en
• National Debtline
  0808 808 4000
  https://www.nationaldebtline.org/
• Money Advice Scotland
  https://www.moneyadvicescotland.org.uk/
• Business Debtline
  0800 197 6026
  www.bdl.org.uk
• Stepchange Debt Charity
  0800 138 1111
  https://www.stepchange.org/
• Citizens Advice
  England – https://www.citizensadvice.org.uk/
  Scotland – https://www.cas.org.uk/
• Advice NI
  0800 915 4604
  https://www.adviceni.net/advice