Farmers who have already taken out a Bounce Back Loan, but borrowed less than they were eligible for, will have the option to top it up from today (10 November).
The government has acknowledged that some businesses may not have anticipated the disruption to their business from coronavirus would go on for so long, so may need to access additional funding.
The move is part of a government package to support businesses through the next few months.
See also: Self-employed worker grants increased
The scheme, first introduced in May 2020, offers businesses loans from £2,000 up to threshold of 25% of turnover, with the maximum loan available capped at £50,000.
Businesses will have the option to top up their existing loan to the maximum amount allowed, although this will be a one-time-only option.
The deadline for applying for a top-up, or to the scheme more generally, has also been extended to the end of January 2021.
This means businesses have two extra months to make an application, based on the previous deadline of 30 November.
This extension also applies to the Coronavirus Business Interruption Loan Scheme, Future Fund, and Coronavirus Large Business Interruption Loan Scheme.
It is estimated that to date more than 1m small and medium-sized enterprises (SMEs) have been lent a total of £38bn through the Bounce Back Loan scheme.
The money is accessed through the applicant’s bank, with the government guaranteeing 100% of the loan with no fees or interest to pay for the first 12 months.
After that the interest rate will be 2.5%/year.
The loans were originally set up to last for six years, but this can now be extended to 10 – which the government says could cut monthly repayments by almost half, although borrowers will end up paying more interest over the lifetime of the loan.
Martin Hanson, head of agriculture for HSBC UK, said the bank’s own figures showed the take-up of Bounce Back Loans in agriculture had been greater than for many other industries.
“I think a lot of different farm advisers were quick to recommend it and flag the fact they existed and the agriculture community therefore had a greater awareness of it than some other sectors,” he said.
“When we look at the volumes in agriculture, it is slightly higher than we would see on average across the book.
“A relatively high proportion also went for the full amount straight away,” he added.
Local Restrictions Support Grants
The government is also making funding available to local councils to offer Local Restrictions Support Grants to businesses that have been forced to close their doors because of lockdown restrictions, such as those in the hospitality, leisure and tourism sectors.
The rates of payments are expected to be as follows:
- Businesses with a rateable value of £15,000 – £1,334 for every four weeks of closure
- Businesses with a rateable value of £15,000 to £51,000 – £2,000 for every four weeks of closure
- Businesses with a rateable value of more than £51,000 – £3,000 for every four weeks of closure.
Businesses that are required to close, but do not pay business rates may be eligible for funding at the discretion of their local council, as may businesses not required to close, but which are severely affected.