Bounce Back loans pass the one million mark

More than one million small and medium-sized enterprises (SMEs) have now taken out Bounce Back loans. The news underlines the popularity of this element of the government’s Covid-19 support for businesses. SMEs that have yet to borrow should consider doing so.

The scheme offers loans of up to £50,000 to any business that has suffered some form of detrimental impact during the pandemic. In practice, that is likely to be almost every business. The loans are available from 11 private sector banks, with the government guaranteeing the debt if borrowers default, and carry an interest rate of just 2.5% a year. A firm pays no interest or charges in the first 12 months.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

The scheme is also worth considering if you’ve already borrowed less than £50,000 from the alternative Coronavirus Business Interruption Loan Scheme (CBILS), which carries more expensive charges. You can’t have a Bounce Back loan and CBILS finance at the same time, but you can use the former to refinance the latter, cutting the cost of borrowing. There is still time to arrange a Bounce Back loan; the scheme is scheduled to remain in place until 4 November.

Explore More

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.