Bounce Back Loan Free Money Calculator
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Reviewed by Calculator Editorial Team
A Bounce Back Loan is a government-backed loan designed to help small businesses recover from COVID-19 disruptions. This calculator helps you determine how much free money you can access through the scheme.
What is a Bounce Back Loan?
The Bounce Back Loan Scheme was introduced by the UK government to provide financial support to small businesses affected by the COVID-19 pandemic. It offers:
- 100% government guarantee for loans up to £50,000
- Interest rates as low as 2.5%
- Flexible repayment terms up to 6 years
- No personal guarantee required
The scheme was replaced by the Bounce Back Loan 2 scheme in 2021, which offers similar benefits but with different eligibility criteria.
How to Use This Calculator
Our calculator helps you estimate how much free money you can access through a Bounce Back Loan. Simply enter:
- Your business's annual turnover
- The loan amount you're considering
- Your business's sector
The calculator will show you the maximum loan amount you qualify for and the amount of free money you can receive.
Formula Used
Bounce Back Loan Calculation
The free money amount is calculated as:
Free Money = Loan Amount × (1 - (Interest Rate × Loan Term))
Where:
- Loan Amount = The amount you're borrowing
- Interest Rate = The applicable interest rate (typically 2.5%)
- Loan Term = The repayment period in years
This formula shows the net present value of the loan, accounting for interest payments over the loan term.
Worked Example
Let's say you're considering a £25,000 Bounce Back Loan with a 2.5% interest rate over 5 years:
| Parameter | Value |
|---|---|
| Loan Amount | £25,000 |
| Interest Rate | 2.5% |
| Loan Term | 5 years |
| Free Money | £23,750 |
In this example, you would receive £23,750 in free money after accounting for interest payments over the 5-year term.
Frequently Asked Questions
Who is eligible for a Bounce Back Loan?
Eligible businesses must be UK-based, have been negatively affected by COVID-19, and meet specific turnover criteria. The scheme was replaced by Bounce Back Loan 2 with different eligibility rules.
What is the maximum loan amount?
The maximum loan amount is £50,000, fully guaranteed by the government.
How long does it take to get approved?
Approval times vary but typically take between 4-6 weeks for most applications.
Can I use the loan for any purpose?
Yes, Bounce Back Loans can be used for working capital, inventory, equipment, or other business needs.