Glossary · UK
What is Bounce Back Loan (BBLS)?
A UK government-guaranteed emergency loan scheme that let small businesses borrow up to £50,000 quickly during the coronavirus pandemic, with the government covering 100% of the lender's risk if the loan defaulted.
Full Definition
The Bounce Back Loan Scheme (BBLS) was a UK government-backed emergency lending scheme that ran from May 2020 to March 2021, designed to get fast, simple emergency finance to small and medium-sized businesses whose cash flow had been hit by the coronavirus pandemic. Businesses could borrow between £2,000 and up to 25% of their turnover, capped at £50,000, through accredited lenders, with a streamlined application process based largely on self-certification rather than the detailed underwriting normally required for business lending, and crucially the government guaranteed 100% of the loan to the lender if the borrower defaulted -- a far higher guarantee than under the related, business-assessed Coronavirus Business Interruption Loan Scheme (CBILS) -- which is what allowed loans to be approved and paid out so quickly. Loans carried a fixed 2.5% annual interest rate, with the government covering interest and fees for the first 12 months, after which loans were typically repayable over six years (later extended, for many borrowers, to up to ten years under the separate Pay As You Grow flexibility options, which also allowed interest-only periods or a further repayment holiday). Because underwriting was light-touch and the scheme was rolled out at speed, it has since faced substantial scrutiny over fraud and non-repayment, with a meaningful proportion of loans written off as unrecoverable, and lenders and the government's counter-fraud bodies have pursued directors personally in cases where loans were fraudulently obtained or funds were misused, including under wrongful trading and director disqualification powers.