Boost your business with the bounce back loan scheme (BBLS)

The coronavirus pandemic has hit the global economy hard. The UK government has introduced various grants designed to help support struggling businesses, but inevitably these don’t cover all circumstances, and some people have fallen through the gaps.

The bounce back loan scheme has been designed primarily to help support small and medium-sized businesses who may be struggling with cash flow, however, it could also be of great benefit to those who have no other help available.

What are bounce back loans?

Bounce back loans are government-backed loans for small to medium-sized businesses worth up to £50,000 (interest and repayment free for the first 12 months). The scheme launched as a quick way to give vital cash injections to small businesses, with some banks being able to generate the payment in a matter of days. As the loan is interest and payment-free for the first year, it may also be a lifeline to businesses that cannot secure other coronavirus funding. The bounce back loan scheme is due to run for six months from 4th May until 4th November 2020.

Who is eligible?

Your business needs to have been operating on 1st March 2020 (although you don’t necessarily need to have a business bank account) and must have been negatively affected by COVID-19. Bounce back loans are separate from other Government personal support so you may still be able to get additional grants and/or universal credit. You cannot apply for both the Coronavirus Business Interruption Loan Scheme (CBILS) and the bounce back loan but if you have already received a loan of £50,000 or less, you can transfer it to the bounce back loan scheme as long as you do so before 4th November 2020.

These loans are designed to be reasonably easy to secure and help you get quick access to money. Business and personal credit ratings won’t be taken into account, and you don’t need to provide evidence of a viable business. Instead, you will be asked to self-certify that your business is not in difficulty and that you have been negatively affected by the Covid-19 pandemic. The loan is likely to show up on your business credit report but not on your personal one.

How do bounce back loans work?

You can borrow between £2,000 and £50,000 (capped at 25% of your 2019 turnover or 25% of your estimated annual turnover for businesses established after 1st January 2019). The government will pay the interest for the first 12 months, and no repayments need to be made during this time. After 12 months, interest will be charged 2.5% p.a fixed for a maximum duration of 5 years. There are no early repayment fees allowing you to pay the debt earlier to save money on the interest.

After the initial 12 months interest-free, 60 repayments will be arranged. Each month you will be required to pay 1/60th of the amount you borrowed plus the interest accrued that month. This means if you can pay off more at the beginning of the repayment period, your future repayments will be less. And if you can pay off the total loan amount before the 60 repayments, you will save even more money.

Where can you apply for a bounce back loan?

You must apply for a bounce back loan online, directly via a bank. There are a growing number of banks that have been approved by the British Business Bank offering this scheme with some allowing you to apply if you don’t have a business account with them or even if you are not an existing customer at all.

What can bounce back loans be spent on?

There are no specific rules with regards to how the loan can be spent on as long as it’s for working capital (i.e. cash flow to keep up with ongoing payments) or investment. You can also use the loan to support your income (although you must seek advice for your personal tax situation). Nothing has to be paid in the first year so should things pick up, you can repay the loan, and you’re no worse off. Or you could pay off existing finance where you can benefit from a year’s holiday from repayments and a reduced interest rate afterwards. Equally, it could provide opportunities to boost your company’s growth by having an injection of capital, allowing you to do what you always wished you could if only you had the money.

Is a bounce back loan right for me?

It is important to remember that this is a loan which you will be liable to repay. While the loan is 100% government-backed, your business will be responsible for the repayment of the loan. You should never borrow more than you need and you shouldn’t consider getting the loan if you know you won’t be able to repay it. If however, you are in a position to repay, it could be an excellent opportunity to inject some cash into your business if spent wisely.

5 top tips for growing your business using the bounce back loan

If you do decide to apply for the loan, ensure you use the money to invest in things that will bring money into the business and help it develop and grow.

  1. Find the right team

For your business to grow, you will need help. If you’re just starting up, you may look to freelancers, then as the business grows you may employ full-time staff, and later on maybe even outsourcing everyday tasks to allow you and your team to focus on strategic planning. Think about all the tasks you currently do and which could be passed to someone else, freeing up your time to work on the bigger picture.

When you do have staff, make sure to invest in your employees. Provide training to build their skillset and encourage them to stay with your company. Build a strong work culture where employees feel valued and rewarded. This can encourage staff to develop better relationships with customers and encourage them to discover new ways to help your company improve and grow.

  1. Get the right tools and equipment

Whether you’re manufacturing products or selling a service, having the right equipment can increase your productivity and give you a robust setup for the future. Take time to research what products fit your business needs and purchase products that are going to provide the best return on your investment.

Investing in creating quality products and providing excellent customer service helps to build trust that you are a reputable company providing premium goods. Happy customers lead to repeat business, and they are likely to recommend you to friends.

  1. Create the right workplace

Having an inviting workspace can boost morale and promote productivity. Whether you work alone or with a large amount of staff, make sure your workplace is comfortable with all the facilities you need. Make it somewhere you look forward to going to and create a productive environment to help stimulate business growth. Employees will benefit significantly from having a light, healthy environment to work in, and if you need to meet with clients, you will need somewhere smart and comfortable to entertain.

There are lots of options nowadays for flexible working arrangements, such as with coworking spaces, where there are no long-term agreements, but you can get unlimited access to your workspace including use of up-to-date facilities like superfast internet and private meeting rooms.

  1. Invest in marketing and branding

If nobody knows about you, nobody is going to buy from you. Spending money wisely on marketing can be a great investment to get your name out there and promote what you do. Make sure you analyse your marketing campaigns allowing you to tweak them in the future as you learn what works for your business.

Spend time working on your branding so that customers learn to associate your company with the solution to their needs. Social media is incredibly powerful in today’s market, so invest in social media management allowing you to build a keen audience. Creating engaged followers helps you become an authority in that area – they’ll be eager to hear what you have to say and will help share your message for you.

  1. Improve your skills/knowledge

Everyone can’t be an expert at everything. Perhaps you can invest some money in improving your skills in an area that would greatly benefit the company. If you are an ideas person, maybe your business could benefit from you learning more about finance or marketing. There are online courses for almost any topic these days, allowing you to fit in training around your schedule. Working with a business coach may be beneficial if you would like to learn about managing and growing a successful business. Determine what skills your business needs, and if you don’t feel you’ll have the time to learn those skills, you can always look to recruit someone that can.