Coronavirus: problems with bounce back loans (25 August)

By August 27, 2020NEWS

The British Business Bank publishes detailed information about Bounce Back loans. We also discuss the scheme in the business loans chapter of our briefing paper Coronavirus: Support for businesses.

Who runs the scheme and who offers loans?

The British Business Bank (BBB) oversees the scheme and accredits lenders (a list is available). The government and the BBB have delegated all aspects of decision-making to individual lenders. This means that lenders make decisions about applications, as well as who they will accept applications from.

How large can the business be?

Although BBLS is advertised as being for smaller businesses, there is no apparent upper limit on the size of businesses that can apply.

Do businesses have to apply to their existing bank?

No, they can apply to any accredited lender, but it may well be more efficient to apply to their existing bank because the approval process involves some basic “know your customer” security checks.

Why is a lender taking so long to decide?

Reasons may vary, so businesses should contact the lender to find out why. Many lenders have been overwhelmed by the level of demand and so it has taken much longer than usual to consider applications – even if in theory that process is quick. It may be worth reviewing recent articles online about which lenders are taking more or less time to decide.

Why do some lenders only accept applications from existing customers?

This is most likely to result from attempts to manage levels of demand. Again, each lender is free to set its own criteria in this area. Some may only accept applications from existing customers with business accounts and have indeed rejected traders who use current accounts. In the latter case it would certainly be worth contacting the lender to discuss the matter.

Why has a lender approved a loan and then closed the business account? What can be done about it?

Banks are free to make these decisions, but customers are equally free to ask why. See the next question too.

What can businesses do if they’re not happy with their lender’s approach?

The first step is to talk to the lender directly to find out more or to seek more information. All customers can use the lender’s own complaints procedure. Many businesses and charities may also use the standard complaints procedure for financial services after they have exhausted the lender’s complaints procedure. Please note:

  • This is unlikely to lead to a quick decision for businesses urgently seeking funds.
  • The BBB does not deal with complaints about such decisions.

What can businesses do if they need further financial support?

Businesses might consider applying for a loan under the Coronavirus Business Interruption Loans Scheme (CBILS), which offers more money but a more complex application process. They may do this even if they’ve had a Bounce Back Loan. Please note:

  • Any existing Bounce Back loan will be refinanced and incorporated into the new loan.
  • All funds will be subject to CBILS conditions, which may be less attractive to the business.

Further information

Coronavirus: Support for businesses (Commons Library)

Support for Small Firms (Commons Library)

Bounce Back Loans Scheme (BBLS) (British Business Bank)

Finance options (British Business Bank)

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