The bounce back loan scheme is a scheme from the government to keep businesses trading during these trying times. Before you rush off and submit your application, stick around, and read this blog to know some of the advantages and disadvantages of a bounce back loan.
Spoiler alert: fortunately, the pros outweigh the cons!
(Watch this quick video on the pros and cons of a bounce back loan.)
I believe that they’re one of the most important things for business owners in 2020 & 2021, and most people should consider getting one.
The pros:
- They’re going to keep your business funded. Maybe you wanted to scale your business, or maybe you just need it to keep your business trading right now. And the money is very easy to get. Normally, if you want to borrow money for a business, you have to put up collateral, put up your property or maybe you have to put up personal guarantees. You don’t have to do all these because the government are taking all the risk.
- If you borrow money for business, it can be expensive. The bounce back loan is different, it’s very cheap it has a 2.5% interest rate. You’re not going to get that kind of rate anywhere else.
- You get a one year payment holiday. You don’t have to pay this bounce back loan back for one year. You start paying it a year after you take the loan. Now, initially, when they came out, you had five years to pay, now they’ve just extended it to 10 years.
The cons:
- You’re gonna have to pay it back. If your business continues trading then, of course, you’re going to have a monthly payment that you will have to pay back.
There’s not really much more than that. They’re designed to keep people’s businesses trading. Whether you need the money or not, take a bounce back loan and just sit on it.
Just be a responsible business owner. I don’t want you going out getting a MacBook or a new car or holiday. It’s not for that it’s there to make your business future secure.
The things you should be investing in are things like marketing, maybe a new website or expanding online. Times have changed, people are going to be looking for products and services online, more so than ever before.
Final thoughts: If you’re a small business that needs access to modest finance to tide you over then the bounce-back loan scheme could be the lifeline you need. As long as it’s for the economic benefit of the business and not for your own personal use, you’re good to go.
Maybe you have applied for a bounce back loan and been rejected? This post has you covered.
