Bounce Back Loans – Advances and Further Borrowing

Can I top up my Bounce Back Loan?

With the economy continuing to be negatively affected by coronavirus, the government has enabled Bounce Back Loans to be topped-up in order to further support smaller businesses in the UK.

The Bounce Back Loan Scheme (BBLS) has been extremely influential in helping businesses experiencing severe cash flow problems due to Covid-19, and this further borrowing ability may help companies to avoid insolvency.

Begbies Traynor Group is the UK’s leading business rescue and recovery specialist, and can provide reliable, professional advice to help you deal with the devastating economic impact of the pandemic.

What is the Bounce Back Loan Scheme?

The Bounce Back Loan Scheme was introduced to provide emergency funding for businesses struggling to deal with coronavirus, and security for the borrowing is provided by the government. Originally launched in May 2020, the scheme has been extended to the end of March 2021 for new applications.

Businesses are able to borrow up to 25% of their annual turnover, and benefit from a fixed interest rate for the full term of the loan. New features have been introduced to the scheme by the Chancellor, with businesses now being able to secure a top-up to their existing loan.

So might your business be eligible for an advance and further borrowing under BBLS rules?

Can you top up your Bounce Back Loan?

If your company has an existing Bounce Back Loan of less than 25% of your annual turnover, you may be eligible for a top-up. When you originally applied for the loan you will have self-certified your business’ turnover and the total loan must not exceed either, 25% of this figure or £50,000, whichever is the lower amount.

This condition applies to further advances on Bounce Back Loans regardless of whether your business has made any repayments, but you must apply to your existing lender for the top-up.

What are the rules on BBLS top-ups?

You can only apply for one top-up on your Bounce Back Loan. A minimum top-up amount of £1,000 also applies, and as we mentioned earlier, a further advance is only available from the lender you applied to for your original Bounce Back Loan.

Under the Bounce Back Loan Scheme you do not have to make any repayments on the loan for 12 months. The 12-month repayment holiday for any top-up amounts also runs from the date you took out the original loan, rather than from the date you topped-up.

It is worth mentioning that the Chancellor has also introduced a Pay As You Grow (PAYG) scheme in connection with Bounce Back Loans. This can further extend the repayment holiday for eligible businesses that have already started to make repayments.

Other options may also be available, including making interest-only payments for six months, and extended the term of the loan from six years to 10 years. As with the original Bounce Back Loan, the top-up must be used for the economic benefit of the business.

If you have already repaid your Bounce Back Loan and need further funding, your business will not be eligible to apply for a top-up under this scheme. You may be eligible to apply for a loan under the Coronavirus Business Interruption Loan Scheme (CBILS), however, or secure another form of business financing.

How to apply for further borrowing on a Bounce Back Loan

You need to contact your lender to apply for a further advance on your Bounce Back Loan. They will send you a short application form to complete with details of the top-up you are requesting.

You will also be required to make specific declarations related to your business’ eligibility. These are the same that were required on your original Bounce Back Loan Scheme application.   

If you would like more information on the Bounce Back Loan Scheme, or help to make an application for a top-up, please contact one of our partner-led team at Begbies Traynor Group. We can offer you a free, same-day consultation, and operate an extensive network of offices around the UK so you are never far away from professional help.