May 20, 2020
The new 100% bounce-back loan scheme since its announcement has provided many small business owners with a sigh of relief. However, only eight banking institutions have been authorised to handle these loans. Unfortunately, these lenders are only focusing more on their existing customers. This decision has raised a lot of concerns among many small businesses owners who feel that they might be locked out of the scheme.
Banking leaders in the UK, such as RBS and HSBC, are putting the priority to their customers even though there are accepting applications from other interested individuals and organisations. These restrictions have made it hard for needy business owners to access cheap government benefits. With the UK still on lockdown, the situation is likely to worsen as most lenders want to satisfy the needs of their customers before thinking of external applicants. If unfortunately you are not a current customer of the eight banking institutions you can always use Upmoney who provide an online comparison service to help you find the best rates online.
The only practical solution is for the government and the British Business Bank to come up with ways to ensure the scheme can meet the demands of many businesses in need of aid. The government and relevant bodies have to speed up the process of accrediting new lenders. It includes allowing approved non-bank lenders like Fintech firms to be part of the scheme.
The loan scheme offers small businesses an opportunity to get loans worth up to £50,000, and an interest rate of 2.5%. Significantly, the first 12 months are payments and are interest-free. So far, the Lloyds Bank has delivered 32,000 loans to small businesses worth up to £1bn.
Even though the bounce-back loan scheme was launched on the spur of the moment and situation, just a few lenders have joined the cause to give out small loans. The programme started with 40 approved lenders, but the number has risen to 49 lenders who are more than willing to work with interested borrowers.
For lender accreditation, the British Business Bank has played a significant role in managing the government’s loan schemes. A key drawback has been the fact that there is only 25 staff working hard to make sure the accreditation process is a success. Many customers of approved lenders have also not been finding the whole process easy.
Many have reported that it is even hard to access the Barclays website. Hence, they have not been able to submit their applications. Barclays has supported its undertakings saying that some businesses have to provide additional information and signatures before their applications can be processed.
Full transparency is crucial for this scheme to be a success, and each involved part has to play its roles diligently. To be a part of the bounce-back loan scheme beneficiaries, small business owners need to abide by set loan application rules and requirements.