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  • Ricky Shafier

Should more lenders be accredited on the Bounce Back Loan Scheme?

Since it launched on Monday over 100,000 businesses have applied for the BBLS, however there are concerns that there aren't enough lenders accredited on this scheme.



Banks have reported they received over 100,000 applications for Bounce Back loans since it launched at 9am Monday, and although the scheme appears to have been far more successful than CBILS, many businesses are still left with nowhere to turn.


At the time of writing this 8 banks are currently accredited on the BBLS scheme. The roll out has, on the whole, been far more successful than the CBILS, with thousands of businesses accessing funding in 24hrs. The process has also been praised for the easy application process. There have been some hiccups with some banks experiencing overwhelming demand in such a short space of time. This begs the question then; why have more CBILS lenders not been accredited on the BBLS?


The scheme is extremely attractive with no bank fees or interest and capital repayments for the first 12 months. The rate of interest thereafter is 2.5%. This means if a business borrows £50,000 the repayments will be just over £900 a month on the full term from month 13. But has this pushed alternative lenders away from the BBLS?


Too costly for alternative lenders?


Non-bank lenders have called for government help with funding following fears that the new state-sponsored ‘bounce back’ loan scheme will damage competition in the market for loans to small businesses. Deposits in low interest High Street Bank current accounts provides them with low interest money to fund these loans whereas alternative lenders rely on capital markets. The FT reported yesterday that in a letter they saw to the Bank of England chief Andrew Bailey from executives at alternative lenders, the biggest challenge to joining the BBLS was the cost of capital.


According to Innovate Finance Head Charlotte Crosswell, 'Fintech' lenders make up 30% of SME lending. With that in mind should more be done to help these lenders access the scheme and make more options available?


The state-owned British Business Bank, which is managing all of the government’s coronavirus loan schemes, is in charge of lender accreditation. It says all of the CBILS lenders have been invited to apply for bounce-back loan accreditation, but will not confirm how many are in the pipeline. “The British Business Bank is accelerating the on boarding of new lenders at pace to further extend the scheme’s reach,” a spokesman for the BBB said.


Has the BBLS been successful?


Mike Cherry, national chairman of the Federation of Small Businesses, said initial feedback on the scheme was mixed. “Some have submitted their short application forms with no trouble at all, others have been told to wait for forms to arrive, and some have struggled to make an application due to site failures,” he said.


According to YourMoney Barclays reported that as of 2pm yesterday, 6,000 loans had been approved, at a value of £200m. Funds are expected to land in accounts today.


As of 4pm yesterday, HSBC said it had received 34,500 applications – 19,800 from existing customers, totalling £650m, and 14,700 from new customers.


Lloyds confirmed it received 32,000 applications on Monday, with 2,000 requests in just the first two hours of launch. The average loan amount stood at £30,000 and yesterday it had paid out £1bn.


Santander received 19,977 applications, offering 15,414 loans worth £431m. The first customer had the money in their account at 10am yesterday morning


What do businesses do if their bank doesn't offer it?


Currently only HSBC and RBS are offering Bounce Back loans to external applicants however they are prioritising their own customers first. You will also need to setup a new business bank account with the bank and this process can take up to 2 weeks. So if you are a businesses looking for a BBLS loan but your bank doesn't offer it the first step is to contact HSBC or RBS. For HSBC you can access the scheme here and for RBS it's here.


Whilst this is not an ideal solution at present alternative lenders and banks are not offering this scheme. It is possible more will be accredited in the coming weeks and the British Business Bank are announcing new lenders as they become accredited. There is frustration on both sides as businesses don't want to switch bank and banks that don't offer bounce back loans do not want to lose their clients.


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