UK Finance has warned small businesses to consider their ability to repay a Bounce Back Loan before taking one out.
They warned businesses after the publication of Treasury figures highlighting the popularity of the Bounce Back Loan Scheme.
The scheme allows small businesses to apply for up to £50,000, with the government guaranteeing 100% of the advance.
Businesses can apply for £2,000- £50,000, or 25% of business turnover, with the government paying interest for the first 12 months.
Treasury confirmed the approval 0f 69,000 Bounce Back Loans worth over £2 billion within 24 hours of the scheme launching.
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Commenting on the figures, Stephen Jones, Chief Executive of UK Finance, said:
‘While businesses only need to fill in a simple form online to apply, it’s important to remember that this type of finance is debt, not a government or bank grant, and will need to be repaid by the borrower over the six-year term of the loan.
‘All businesses should consider carefully their repayment obligations before completing a Bounce Back loan application.’
Under the terms of the scheme, lenders will seek to recover any unpaid interest and principal on BBL from borrowers.