Bounce Back Loans – The story so far…

The Bounce Back Loan scheme opened for business yesterday, via the British Business Bank, and demand was huge. In the first few minutes, thousands of applications went in, and the British Business Bank website struggled a little at times. By the end of the day, it is reported, over 100,000 applications were made.

So, how did it go?

Overall, it seems to have been a successful launch. There were some really positive performances from the banks, and some that were less so!

Particularly impressive was Santander, who not only got its application and document approval process set up and running well, but also had funds into bank accounts before close of business yesterday.

Barclays seem to have struggled from mid-afternoon, but NatWest has really fallen down having struggled to accept applications and to get forms out to borrowers, sliding promised delivery dates from ‘end of business’ to midnight. If you’re one of those who are waiting, others do seem to be coming through this morning so hold tight!

We have heard the some banks have tried to apply a 9% rate to BBLS applications. This is wrong! The agreed rate is 2.5%, so be sure if you are applying, that you don’t commit to anything else.

What do you need to know?

Most of the detail is on the British Business Bank Website, but there are some additional bits of information that we picked up yesterday.

1. The current panel of lenders is limited, but, as with CBILS, more are expected to join. As with CBILS though, banks are unlikely to accept applications from non-customers while they are being bombarded with demand.
2. HSBC ARE taking applications from new customers, so could be an option if your bank isn’t on the existing panel. The approval process will be slower as you’ll need to go through the identification process as well as the BBLS application process.
3. The process is simple, and you can start your application in several ways. The easiest is to go direct to your bank’s website and apply from there. The form is simple, and requires your to self certify your turnover for the year to December 2019. Be careful not to get too excited or enthusiastic here, as you may be asked to prove your estimate!
4. An ‘Undertaking in difficulty’ is NOT precluded from making an application. Contrary to the information that we had last week, the guidance simply says ‘If the business is a “business in difficulty” as of December 31 2019 then businesses in agriculture, aquaculture or fisheries may not qualify for the full amount; and the loan cannot be used for export-related activities.’ We explained in this post how to identify whether you would be included in this category, but we have been given this form, which is part of the application process for the BBLS that might be helpful.
5. These funds are interest and repayment free for 12 months. The Government is paying the banks the interest for the first 12 months, then you as the borrower take over payments for the interest and the capital repayments after that. This COULD be a really good way to obtain funds to inject capital into your business. Before you do though, make sure that you have a plan to ensure you will be able to repay it!
6. Related to point 4 above, be aware that the BBLA loans are NOT subject to the Consumer Credit Act 1974, so there is no comeback on the banks if you borrow and can’t actually meet the repayments. This was one of the primary causes of the delay in the launch and detail of the scheme.

If you’ve applied under the scheme, do let us know how you find the process. In particular we’re interested to understand any complications you may have to contend with, and how long it may take to get funds into your account!

If you have any questions around the BBLS scheme, or anything else, please do get in touch. We’re here to help in any way we can.