Bounce Back Loan Scheme (BBLS) Update

Bounce Back Loan Updates

Bounce Back Loan Scheme (BBLS) Update

Chancellor Rishi Sunak has written to accredited lenders about how the Government wants Bounce Back Loan Scheme (BBLS) to be run. He makes the point that as a 100% guaranteed loan scheme, the price of BBLS is critical to its success and that the loans need to ensure that these loans are affordable and accessible.

He has come to the decision that the interest rate should be set at 2.5%.

 Legislation and regulation

1. Amending the regulatory perimeter

The Treasury has made a statutory instrument (SI) that amends the Regulated Activities Order (RAO) so that providing regulated small business loans of £25,000 or less to sole traders, unincorporated associations and partnerships fewer than four people under the Consumer Credit Act 1974 (CCA), will not be a regulated activity for the purposes of BBLS. This will enable small businesses to access their loans quickly in the way that is envisaged under BBLS. The SI retains the protections for these loans around debt collection, recognising that the importance of appropriate protections for borrowers who experience difficulties in paying back these loans.

The SI has been laid and will come into force on Monday 4 May 2020. The SI can be found at:

bounce back loan update

2. Amending the CCA

The Government will introduce primary legislation at the earliest opportunity to disapply sections 140A-140C of the CCA for BBLS lending. The primary legislation will have retrospective effect, meaning that it will apply from the start of the scheme on Monday.

Interaction between BBLS and the Coronavirus Business Interruption Loan Scheme (CBILS)

Businesses will be able to borrow up to £50,000 under BBLS, capped at 25% of turnover. In order to ensure that businesses have a clear understanding of the support available to them under the loan guarantee schemes, the minimum facility size for term loans and overdrafts under CBILS will increase to £50,001 to avoid any risk of confusion or overlap. Any customer with a CBILS loan or overdraft of £50,000 or less will be able to switch that facility to a BBLS loan should they choose to do so over the next few months. This change to the minimum facility size will not apply to asset finance and invoice finance CBILS facilities.

As of 2 May the GOV.UK web site has not been amended:

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