Loan for a Business

What is a loan for a business?

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A loan for a business is when your company or business borrows money from a bank, the company’s owners (or shareholders), directors, or other financial companies that lend money to businesses. Loans work similar to credit cards or house mortgages. Your business borrows the money for a certain period of time. During the period of the loan, your business must make monthly principal plus interest payments until the entire amount is paid back.

Is a business loan a good idea?

A business loan may be a good idea if your business will generate enough profit (sales – costs) to be able to make monthly payments plus interest. That is true in normal circumstances. We will cover standard business loans in a separate blog posting. In this post, we will focus on the Covid-19 pandemic and the exceptional economic circumstances that the UK is in. This blog is about the Bounce Back Loans that have been recently extended until the end of November 2020.

If you are a start-up, the UK government has an excellent start-up loan scheme that we have recently written about.

What is a coronavirus Bounce Back Loans?

Coronivurs Bounce Back Loans are part of the UK’s government business loan scheme to help small and medium-sized businesses. During the Covid-19 pandemic, many businesses are suffering and may not generate enough revenue to make monthly payments from on-going activities, but may be able to pay back the money from other sources or reserves. The UK government has introduced a number of emergency business loan programs for small and medium-sized businesses. These loans are quite attractive and every business should consider taking out government-backed emergency loans.

How to apply for a Bounce Back Loan?

The best way to apply for the Bounce Back Loan is at your bank where your company and/or your business regularly conduct financial activities. You may also apply at non-bank institutions such as Tide or Funding Circle. Please see below for relevant links to different financial service providers and banks who can help your business with the bounce back loan for your business. 11 lenders are participating in the Bounce Back Loan scheme. You have until 30 November 2020 to get the Bounce Back Loan.

Under the Bounce Back Loan, your business can:

  • borrow between £2,000 and up to 25% of your business turnover (sales).
  • borrow the maximum amount of £50,000.
  • borrow a loan that is for  six years.

There is no interest to pay for the first 12 months. The government guarantees 100% of the loan. The interest rate is 2.5% per year after the first 12 months.

The Bounce Back Loan does have a number of requirements:

  • Your business must be UK based
  • Your business had to be established before 01 March 2020
  • Your business had to have been adversely impacted by the coronavirus

Please note that you can not apply for this business loan if you are already claiming funding from other government programs such as the Business Interruption Loan Scheme, Large Business Interruption Loan Scheme, Covid-19 Corporate Financing Facility.

How to apply for a Bounce Back Loan with Lloyds Bank?

You must be an existing Lloyds Bank customer. You can apply online for the Bounce Back loan for your business via the Lloyds Bank’s Bounce Back Loan Scheme website.

How to apply for a Bounce Back Loan with HSBC?

HSBC requires that you are a client of the bank and also has an on-line application that you can easily start.

How to apply for a Bounce Back Loan with Barclays?

Barclays requires that you are an existing client and your on-line details are all up to date. If they are, then they have an on-line application process for you just like HSBC and Lloyds.

How to apply for a Bounce Back Loan with Santander?

You have to be a Santander client to apply for a Bounce Back Loan. If your business banks with Santander then you can apply for the loan online.

How to apply for a Bounce Back Loan with Natwest?

If you are an existing Natwest customer you can apply for a Bounce Back Loan on-line.

How to apply for a Bounce Back Loan with the Royal Bank of Scotland?

If you are an existing customer of the Royal Bank of Scotland you can apply online.

How to apply for a Bounce Back Loan with the Co-Operative Bank?

You have to have an existing account with the Co-Operative Bank and apply on-line.

The British Business Bank has put together an excellent site that has all the financial service companies and banks that offer bounce back loan processing.

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