Fintech and alternative finance headlines with an exclusive Editor's Note each week. The loss of people within the company that previously could have been managed will further put pressure on reducing bottom lines. It says it is as yet unable to estimate the overall level of fraud. You might have noticed a recent flare-up of SME anger on social media over the Bounce Back Loan Scheme (BBLS). The scheme is a 100% government backed initiative for small businesses; You can apply for a loan between £2,000 and £50,000* (up to a maximum of 25% annual turnover), for 6 years The moves are similar to what high street banks are doing, many of which are prioritising existing customers and Lloyds Bank has taken the rather more dramatic step of stopping all new business account applications. EC2V 5DU, Alternative Lending State of the Market Report, Starling Bank tops the tables for current account switching, Revolut co-founder Nikolay Storonsky named UK fintech’s first billionaire, Lenders and MPs call for clarity as Bounce Back Loans deadline approaches, again, Starling Bank CEO Anne Boden: Pandemic helping fintechs win customers. The scheme, already affectionately known as “Beble”, gives access to a Government 100% backed loan for up to 25% of a business’ turnover, or £50,000, whichever is less. The Bounce Back Loans scheme remains open and now has 28 participating lenders, all of which charge interest at the agreed rate of 2.5%. Our core focus is on disruption to lending, banking and investing, including alternative lending, challenger banks and digital wealth management. Given the overwhelming demand for Bounce Back Loans, many banks have been forced to prioritise existing customers. The scheme, already affectionately known as “Beble”, gives access to a Government 100% backed loan for up to 25% of a business’ turnover, or £50,000, whichever is less. No matter what your plans are this moment in time, never before has it been so important to review your protection programme. As of 6 … You can apply up to 30 November 2020. Lending through the Bounce Back Loan scheme is capped at £50,000. There are two challenges facing not just fintechs, but all lenders who’ve recently been accredited. Bounce Back Loans provide loans of up to £50,000, or a maximum of 25% of annual turnover, to registered and unregistered small businesses. Tide’s approach was to implement a waiting list for the BBLS, while Starling Bank from today will prioritise the applications of existing customers. Complaints have ranged from the speed at which cash is being lent out, to new customers finding themselves struggling to be approved for the BBLS. We need to use these cookies to make our These allow us to recognise and count the The Chancellor extended the Coronavirus Business Interruption Loan, and with the introduction of the Business Bounce Back loan (BBL) extra funds will be a lifeline for many business owners. Adding to the confusion, banks aren’t able to disclose their limits, leading to guesswork at when the taps will be turned off (or turned down). The Bounce Back Loan Scheme (BBLS) provides financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak and that can benefit from £50,000 or less in finance. All Rights Reserved, This is a BETA experience. The NOA says this lower level of checks creates credit risks as it increases the likelihood that loans are made to businesses which will not be able to repay them, leading to losses of taxpayers’ money. Tide, for instance, wrote to 30,000 customers on its BBLS waiting list (more on this below) yesterday to note that it was nearing the end of its limit, and would be phasing down lending until a higher limit had been approved. There is one additional complicating factor. Throw into the mix the overdraft, the directors loans that started the company, and the other many forms of available finance, then it is clear that illness or death will start putting a lot of stress on the business. Opinions expressed by Forbes Contributors are their own. relevant ads. However, it is still introducing a slowdown among some lenders. I have been writing about all aspects of household finance for over 30 years, aiming to provide information that will help readers. EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change. The NAO found that lenders approved loans for existing business customers within 24 to 72 hours. Manage your everyday spending with powerful budgeting and analytics, transfer money abroad, spend easily in the The financial world can be complex and challenging, so I'm always striving to make it as accessible, manageable and rewarding as possible. We use   cookies to personalise your experience on Revolut. As of 6 September, the Scheme has delivered more than 1.2 million loans totaling £36.9 billion. You have until 4 … The speed at which fintechs can distribute funds (hitting lower lending limits earlier than anticipated). The NAO says that, over the coming months, the extent of losses due to fraud will become clearer, but the full extent of losses, due to both credit and fraud, will not emerge until the loans are due to start being repaid from 4 May 2021. Tide’s approach was to implement a waiting list for the BBLS, while Starling Bank from today will prioritise the applications of existing customers. Alan Richardson, Business Protection & Group Leader, LifeSearch. All the participants in the scheme will start providing monthly fraud reports from October 2020 onwards. This is a far better situation than the government’s other coronavirus lending measures *cough* CBILS *cough* which originally required per loan approval by the powers that be. Starling Bank doesn’t appear to have reached its limit, now with over £300m leant out, but will likely have the same issue at some point. The government also acknowledges that providing funds at such pace leaves public money exposed to a significant fraud risk. The scheme is a part of a wider package of government support for UK businesses and employees. Going forward, lenders themselves will surely want to see that their finance is secured, and not just against the family home. And remember that in order to apply for a Bounce Back Loan, your business needs to have generated over £8,000 of turnover in 2019 and for more than 50% of your 2019 turnover to have come from business trading. Even before COVID-19 struck, many of our customers had been looking at their business models and cash flow. The loans are advanced by commercial lenders (see list below) with the government providing a 100% guarantee against the loans under the Scheme. Lenders are expected to make attempts to recover the money but the government will step in if this cannot be achieved in a ‘reasonable’ amount of time. But the scale of the potential losses will raise questions about the scrutiny given to loan applications in the hurry to release funds into the economy. On 24 September, the government announced the extension of the Bounce Back Loans scheme as part of its Winter Economy Plan. The challenges mentioned above aren't unique to challenger banks or non-bank lenders, however they may be felt more acutely by these institutions and their customers as a result of: Neither of which is helpful for SME customers currently struggling to make ends meet during these chaotic times, but hopefully this provides some context to the challenges. You will need the following information to apply for a loan from the Bounce Back Loan Scheme (BBLS): Company name, address and company registration number (where applicable) Turnover for 2019 (estimates can be used) Santander or Cater Allen current account, with a sort code and account number, which you use to manage your business where necessary. Business in the UK is having a tough time. Unsurprisingly with such a dramatic lending programme the Treasury, via the British Business Bank, has placed per lender limits on how much can be lent out.