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British Business Bank announces new lenders under the Bounce Back Loan Scheme for smaller businesses

Press release 07 May 2020

  • Allied Irish Bank (GB)/AIB (NI), The Co-operative Bank and Starling Bank to join existing Bounce Back Loan Scheme accredited lenders
  • Onboarding of new lenders continues at pace

Today the British Business Bank has announced that it has approved three new lenders for accreditation under the Bounce Bank Loan Scheme. The scheme is intended to target small and micro businesses in all sectors 1 , with loans from £2k up to 25% of the business’ turnover with a maximum loan of £50k.

Allied Irish Bank (GB)/AIB (NI) 2 , The Co-operative Bank and Starling Bank join TSB who were also accredited this week. They will be able to provide financial support to smaller businesses across the UK that are losing revenue and seeing their cashflow disrupted, as a result of the Covid-19 outbreak.

Following their approval, these three lenders will be putting in place the operations required to start lending under the scheme and will confirm shortly the dates from which they will be ready to start receiving Bounce Back Loan Scheme applications from smaller businesses across the UK.

All lenders accredited under the Coronavirus Business Interruption Loan Scheme (CBILS) have been invited to become accredited to offer loans under the terms of the Bounce Back Loan Scheme. The British Business Bank is working at pace to accredit those lenders who want to provide lending under the scheme to further extend its reach and provide more choice for smaller businesses.

  • 1

    Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive), public sector bodies, a state -funded primary or secondary schools and insurance companies are not eligible to apply.

  • 2

    AIB Group (UK) plc trading as Allied Irish Bank (GB) and AIB (NI)

There has been incredible demand from smaller businesses for Bounce Back Loans since the scheme launched this week. Onboarding lenders with the capability and means to deliver the scheme rapidly means that more UK smaller businesses will be able to access the finance they need to get through the current pandemic. Keith Morgan CEO, British Business Bank

The Bounce Back Loan Scheme has previously accredited 11 lenders. These are Bank of Scotland, Barclays, Clydesdale Bank & Yorkshire Bank, Danske Bank, HSBC, Lloyds Bank, NatWest, Santander, TSB, RBS and Ulster Bank.

About the Business Bounce Back Loan Scheme

The Bounce Back Loan Scheme enables businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year. The government will cover interest payable in the first year.

  • Up to £50,000 loan: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
  • 100% guarantee: The scheme provides the lender with a government-backed, full guarantee (100%) against the outstanding facility balance, both capital and interest. The borrower always remains 100% liable for the debt
  • Interest rate: The government has set the interest rate for this facility at 2.5% per annum, meaning businesses will all benefit from the same, low rate of interest.
  • Interest paid by government for 12 months: The government will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs.
  • No principal repayments for first 12 months: Borrowers will not have to begin principal repayments for the first 12 months, thereafter capital will be repaid on a straight line basis with interest.
  • No fee for businesses or lenders to access the scheme
  • Finance terms: The length of the loan is for six years but early repayment is allowed, without early repayment fees.
  • No personal guarantees: No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle.

How to apply

Businesses should check the British Business Bank website to find out which lenders provide Bounce Back Loans.

Businesses will be required to fill in a short online application form on their lender’s website, which self-certifies whether they are eligible for a Bounce Back Loan facility. Eligible businesses will be subject to appropriate customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. Some State aid restrictions may apply to applications.

Eligibility criteria

Businesses from all sectors 1 can apply for a facility. The certifications which an applicant must provide to its lender:

Confirmation that it is UK-based in its business activity, and established by 1 March 2020 Confirmation that it has been adversely impacted by the Coronavirus (Covid-19) Confirmation it is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility) Confirmation that it is not in bankruptcy, liquidation or undergoing debt restructuring

  • 1

    Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive), public sector bodies, a state -funded primary or secondary schools and insurance companies are not eligible to apply.

Notes to editors

Covid-19 Loan Schemes

The new Bounce Back Loan Scheme complements other loan schemes provided by the government to assist businesses during the coronavirus epidemic:

Coronavirus Business Interruption Loan Scheme (CBILS)

CBILS is a demand-led scheme offering lending to smaller businesses with turnover of up to £45m. Invoice finance and asset finance facilities are available from £1k to £5m, while term loan and revolving credit facilities are available from £50k to £5m (the lower limit for these has increased from £1k following the introduction of BBLS). The government makes a payment to cover interest and lender-levied fees under CBILS for the first 12 months.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

CLBILS is a demand led scheme targeted at larger businesses with a turnover of more than £45m. It offers term loans, revolving credit facilities, invoice finance and asset finance. Businesses with turnover between £45m and £250m can apply for facilities of up to £25m, while businesses with turnover of over £250m can apply for facilities of up to £50m.

Future Fund

The Future Fund will support the UK’s innovative businesses currently affected by Covid-19. These businesses have been unable to access other government business support programmes, such as CBILS, because they are either pre-revenue or pre-profit and typically rely on equity investment. The scheme will deliver an initial commitment of £250m of new government funding through convertible loan notes which will be unlocked by private investment on a match funded basis. The government scheme, which will be developed in partnership with the British Business Bank with the intention of launching for applications in May, will initially be open until the end of September.

About the British Business Bank

The British Business Bank is the UK government’s economic development bank. Established in November 2014, its mission is to make finance markets for smaller businesses work more effectively, enabling those businesses to prosper, grow and build UK economic activity. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.

The British Business Bank programmes are supporting more than £7.2bn of finance to over 93,000 smaller businesses (as at end of September 2019).

As well as increasing both supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of the finance options available to smaller businesses:

The British Business Bank Finance Hub provides independent and impartial information to high-growth businesses about their finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success. The new site also features case studies and learnings from real businesses to guide businesses through the process of applying for growth finance.

As the holding company of the group operating under the trading name of British Business Bank, British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). The British Business Bank operates under its own brand name through a number of subsidiaries, none of which are authorised and regulated by the FCA.

British Business Bank plc and its principal operating subsidiaries are not banking institutions and do not operate as such. A complete legal structure chart for British Business Bank plc and its subsidiaries can be found on the British Business Bank plc website.

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