Companies in financial difficulty have been applying in large numbers for top ups to their Bounce Back Loans after England went back into a full coronavirus lockdown.
The loans scheme was created in the early months of the pandemic with the aim of ensuring that businesses suffering cashflow crises were able access enough money to stay afloat during the worst of the crisis.
But with a second wave of coronavirus now well underway and a second lockdown in place, the opportunity to top up loans is being made available to companies in urgent financial difficulty.
Thousands of firms are understood to have applied for top ups within days of the government announcing it will again be providing guarantees to lenders in support of loans they provide to business customers.
Lenders involved in the Bounce Back Loan Scheme (BBLS) have been advised that they can offer top ups to loans wherever a company has previously borrowed less than the maximum amount available to them.
The BBLS was created specifically to provide financial support to SMEs that were hit hard by the virus crisis but all government-backed loan schemes established in response to the COVID-19 situation have been extended until the end of January 2021.
According to the Financial Times, banks involved in administering the BBLS scheme and giving out loans to business customers had each received thousands of applications for top ups within hours of the initiative being restarted.
Loans provided via the scheme are 100 per cent guaranteed by government and don’t involve fees or interest payments for the first 12 months, although an interest rate of 2.5 per cent per year becomes applicable thereafter.
Tens of thousands of companies have taken on Bounce Back Loans over the course of the year, with the amounts involved varying from £2,000 to £50,000.
Top up loans are intended for companies facing financial trouble as a result of the latest lockdown restrictions, with the same terms applicable and loans only accessible to businesses through their existing lenders.
