Bounce back loan

[Nick Walsh Studios]

Bounce Back Loan MSE Survey results: HSBC, Starling & Tide worst service + new customers & sole traders struggle + delays common.
https://www.moneysavingexpert.com/n...860&utm_campaign=nt-bignote-one&utm_content=3

Starling Bank reject 57% of Sole Trader Applications

Well I can't support a bank that does not support small business so I am moving back to Monzo.


Martin's analysis: 'For many, bounce back loans have been a speedy lifeline, but for others the story has been VERY different'
MSE's founder Martin Lewis said: "For many, bounce back loans have been - as they were touted by the Chancellor - a speedy lifeline to support businesses and their owner’s incomes. Yet for a substantial number of people the story has been very different with a catalogue of problems.

"One in five have faced delays of over a month. Sole traders, in particular, have suffered being over three times as likely to be rejected as limited companies. Similar is true of small businesses which didn't have business accounts with a firm offering one of these loans, as they’ve struggled to get any help.

"A significant number cited credit checks as a reason for rejection, even though the loans were touted as 'available to all - no credit checks needed'.

"And of course while the loans were meant to be lender-agnostic as all banks were offering the same product, the experience certainly hasn’t been. While Lloyds has 81% net positive feedback, its major competitor HSBC scored a shocking -45%. It was only beaten by challenger bank Tide at -90%, which has failed to give virtually any loans yet. Tellingly, both these two invited new customers to apply – many of whom have had poor experiences.

"We will be sending a dossier of our findings to the Treasury, the FCA and the British Business Bank to hopefully improve the process going forward."

 

[Nick Walsh Studios]

HSBC are not declining on turnover as that is not a criteria.

You can have £10 in your business bank account but if you run it properly you can still apply and get the full £50k.

Re- Money Saving Expert Survey:
HSBC scored a shocking -45%. It was only beaten by challenger bank Tide at -90%, Starling -1

 

[Nick Walsh Studios]

HSBC can be sometimes quite slow on opening feeder accounts from what I've seen. Depends on your luck.



If applying with your main bank, you would more than likely get it quite easy.

Re- Money Saving Expert Survey:
HSBC scored a shocking -45%. It was only beaten by challenger bank Tide at -90%, Starling -1

 

[Nick Walsh Studios]

HSBC can be sometimes quite slow on opening feeder accounts from what I've seen. Depends on your luck.



If applying with your main bank, you would more than likely get it quite easy.

Re- Money Saving Expert Survey:
HSBC scored a shocking -45%. It was only beaten by challenger bank Tide at -90%, Starling -1

 

[Nick Walsh Studios]

For the loan itself, lenders are not allowed to use credit scoring. HSBC have worked around this by requiring a ‘loan feeder account’ to funnel the funds through, and that’s how they’re justifying all their usual checks.

The feeder account only stays open for a day, and is solely used to draw down BBL funds, so it’s a pretty poor justification really.

Re- Money Saving Expert Survey:
HSBC scored a shocking -45%. It was only beaten by challenger bank Tide at -90%, Starling was at -1

 

[Aniela]

HSBC are not declining on turnover as that is not a criteria.

You can have £10 in your business bank account but if you run it properly you can still apply and get the full £50k.

The issue is on repayment when they will turn the screw.

That isn't really true.

Turnover isn't a 'requirement' to be eligible for the BBL as whole but the lenders can choose to decline you based on it.

The lenders can decline you for whatever reason they want, including HSBC.

Turnover is something they look at as part of the risk profile before lending.

 

[Aniela]

Re- Money Saving Expert Survey:
HSBC scored a shocking -45%. It was only beaten by challenger bank Tide at -90%, Starling was at -1

The scoring you pulled is a little unfair as they were one of the extremely small amount of lenders that accepted BBL from non-customers. For existing customers, their score was -24%, which is still pretty bad but not as bad considering the overall picture.

 

[Aniela]

Starling Bank reject 57% of Sole Trader Applications

Well I can't support a bank that does not support small business so I am moving back to Monzo.

Are you not jumping the gun a bit there?

Numbers like that on their own are irrelevant. What if starling just have a lot of sole traders that were trying to get free money by over-stating numbers etc.

People who have never used their accounts with Starling applying for 50k loans etc.

 

[Oxfolpwhov]

I don’t know the government is a sleep or what.
There is a lot of business who abuse lie. the government should go after anyone who lie or abuse

 

[Mr D]

I don’t know the government is a sleep or what.
There is a lot of business who abuse lie. the government should go after anyone who lie or abuse

Takes time and effort to do that. Means the staff doing that cannot do something else. And for what punishment?

 

[jimbof]

Until loans start to go bad, there is very little Gov money being handed over to the banks, so I think the furlough and self employed schemes are going to get much, much more attention. Even for a maximum sized loan of £50,000 under BBLS the Gov has only paid out £1250 (for an entire business or group of businesses!) when this would barely cover a month's minimum wage furlough for a single employee.

Of course there may well be much more attention paid if (when for some) businesses start failing...

 

[Aniela]

Until loans start to go bad, there is very little Gov money being handed over to the banks, so I think the furlough and self employed schemes are going to get much, much more attention. Even for a maximum sized loan of £50,000 under BBLS the Gov has only paid out £1250 (for an entire business or group of businesses!) when this would barely cover a month's minimum wage furlough for a single employee.

Of course there may well be much more attention paid if (when for some) businesses start failing...

There will be too many businesses failing to repay for them to give any sort of attention.

It's more likely a different system will be put in place to better enable repayment of loans, for those who can't.

The lenders have been proposing a 'student loan' style repayment scheme.

 

[Mr D]

The lenders have been proposing a 'student loan' style repayment scheme.

Because the graduate tax scheme is known to work badly.... ?

 

[Aniela]

Because the graduate tax scheme is known to work badly.... ?

The student loan scheme and graduate tax scheme are two different things, so don't get them mixed up.

Although I can see a similar situation occurring. "You can't pay us back properly, so you now owe us 30k which you will repay via a tax on profits."

Well.... my business is closed and I no longer operate a business so there's nothing for you to tax.

Unless they did something where they added a an extra tax on all of your income, including employment.

I feel the lenders want that option because they know they're not going to be able to logically chase tens of thousands of small businesses for debts, without massive PR backlash. So this allows them to side-step that problem and offer "help", while sidestepping the problem of the money not getting paid back.

It puts the problem into the governments hands, rather than theirs.

 

[Mr D]

The student loan scheme and graduate tax scheme are two different things, so don't get them mixed up.

Although I can see a similar situation occurring. "You can't pay us back properly, so you now owe us 30k which you will repay via a tax on profits."

Well.... my business is closed and I no longer operate a business so there's nothing for you to tax.

Unless they did something where they added a an extra tax on all of your income, including employment.

I feel the lenders want that option because they know they're not going to be able to logically chase tens of thousands of small businesses for debts, without massive PR backlash. So this allows them to side-step that problem and offer "help", while sidestepping the problem of the money not getting paid back.

It puts the problem into the governments hands, rather than theirs.

LOL - the student loan scheme repayment is the graduate tax scheme.
Bit hard to get something that has 2 names mixed up when referring to the same thing.

 

[Aniela]

LOL - the student loan scheme repayment is the graduate tax scheme.
Bit hard to get something that has 2 names mixed up when referring to the same thing.

Actually, they're not.

Similar but different outcomes.

 

[Read and Buried]

Hey guys, I got a business that was set up in Jan 2020 incurred some start up costs and had not had a business bank account set (still does not). Our first year revenue forecasts were strong (6figures) pre covid19. Now not so much, but can put forward the same business plans that were drawn up early 2020 if needed.

Do you reckon we'd have success with 1st applying for a business account and then to BBL? If so which bank seems a "sure" bet to go for?

Any advise is more than welcome.

 

[jimbof]

Hey guys, I got a business that was set up in Jan 2020 incurred some start up costs and had not had a business bank account set (still does not). Our first year revenue forecasts were strong (6figures) pre covid19. Now not so much, but can put forward the same business plans that were drawn up early 2020 if needed.

Do you reckon we'd have success with 1st applying for a business account and then to BBL? If so which bank seems a "sure" bet to go for?

Any advise is more than welcome.

Had you actually started trading on 1st March? If not you wouldn't be entitled to BBLS at all.

The banks are quite leary (I think understandably) of folk turning up who the first they hear about their six figure business is when they want £50k or some portion of.

For what it is worth I applied for my BBL with Metrobank which was painfree once they eventually got their system set up, though I was an existing customer. They are still taking new business account applications (I think), but you will have to go to store in person to set up a meeting with a staff member to get the account open (they closed the online form after being inundated). You may find the reality of that means your meeting to set up an account is quite some time in the future...

See here:
https://www.metrobankonline.co.uk/business/

Some banks it seems have stopped opening business accounts altogether at the moment. I think both Lloyds and Natwest are in that category.

If you also have poor personal credit rating I'm not sure I'd bother trying to go down this route as you're bound to get credit checked during the account application process.

 

[Mark T Jones]

Hey guys, I got a business that was set up in Jan 2020 incurred some start up costs and had not had a business bank account set (still does not). Our first year revenue forecasts were strong (6figures) pre covid19. Now not so much, but can put forward the same business plans that were drawn up early 2020 if needed.

Do you reckon we'd have success with 1st applying for a business account and then to BBL? If so which bank seems a "sure" bet to go for?

Any advise is more than welcome.

In your circumstances BBL is very unlikely, but you might qualify for a Start Up Loan

 

[Read and Buried]

Thanks for the responses so far.
ps. Personal credit rating is Excellent.
Understand HSBC might be a decent option to try our luck?

 

[Numerix Accountancy]

BBL Loans

HSBC - Most of my clients who applied via HSBC have complained.
I have 3 Limited Company clients who submitted applications 1 month ago - No response yet,
even after 2 interim calls to escalate it.

Tide - equally inefficient as HSBC

Lloyds - Generally positive feedback from my clients, applications processed with 1-2weeks

Barclays - Generally positive feedback from my clients, applications processed with 1-2weeks

 

[jimbof]

From what I understood, Tide don't actually have any money left to lend!
https://www.altfi.com/article/6789_tide-shutters-bounce-back-loans-as-funding-runs-out

 

[JEREMY HAWKE]

From what I understood, Tide don't actually have any money left to lend!
https://www.altfi.com/article/6789_tide-shutters-bounce-back-loans-as-funding-runs-out

Would this mean they might fail a stress test ?

 

[Mark T Jones]

Would this mean they might fail a stress test ?

probably not. They will have an allocated BBL ‘pot’ which will have run out

also, a Government guarantee will have some bearing

 

[jimbof]

Would this mean they might fail a stress test ?

I don't know enough about financial industry regulation, but as they're not even a bank, does this even apply?

The bank account from Tide appears to be offered by Clearbank. I think the BBL funds were a separate pot they've not been able to increase.

 

[JEREMY HAWKE]

I don't know enough about financial industry regulation, but as they're not even a bank, does this even apply?

The bank account from Tide appears to be offered by Clearbank. I think the BBL funds were a separate pot they've not been able to increase.

A pretend bank ?

 

[Gordon - Commercial Finance]

A pretend bank ?

Yes they're a pretend bank.

Although I think the PC term is "challenger" bank nowadays

 

[JEREMY HAWKE]

Yes they're a pretend bank.

Although I think the PC term is "challenger" bank nowadays

Ha ha I have always wondered what that was
I knows now

 

[jimbof]

I don't think Tide even reach the level of challenger bank. They're building a business banking platform, but a bank they are not. Hence why the actual bank account is provided by Clearbank. "Business banking challenger" not "challenger bank"... get your head around that! Banks have a banking license I believe...
See this from a Tide staffer:
https://community.tide.co/t/does-tide-have-a-banking-licence/5638/2

Challenger banks were something different. TSB, Virgin and Metrobank all fall into Challenger bank categories, as they're "challenging" the Big 4 (HSBC,Lloyds,Barclays,RBS) but acting as a conventional bank with a banking license. Starling and others are also Challenger banks. But not Tide.

 

[jimbof]

For anyone who doubted that in signing up for a BBL they were signing two agreements, one with the Govt making certain undertakings, and one with the bank, with the Govt paying to you the 1st year interest, but just directing the payment to the bank directly instead, see below received to day from my bank.

"Good luck" to those who think the Govt doesn't know what you've signed up for and that it is between you and the bank...!

Hello xxxxxx,

We're getting in touch about your Bounce Back Loan for xxxxxxxxx LIMITED provided on xx/06/2020. This is for your information only, and you don't need to do anything further.

As part of the UK Government's Bounce Back Loan and under the Temporary Framework for State Aid measures that were introduced during the coronavirus pandemic, you are entitled to a Business Interruption Payment ("BIP") from the UK Government.

This payment is £xxx.xx and covers the interest payments on your loan for the first 12 months of your term of £xx.xx each month.

Interest payments
As you have directed in the application process for your Bounce Back Loan, the payment of the above interest will be made directly to Metro Bank by the British Business Bank, and no further action is required on your part.

The total amount of your BIP is £xxx.xx, the total amount of your Bounce Back Loan is £xxxxx.00 and the total combined amount of your BIP and your Bounce Back Loan is £xxxxx.xx.

The value of the aid arising from this facility is £xxxxx.xx.

Goes on further about state aid limits etc.

 

[Wantinglegaladvice]

Within the scheme's rules, can you apply for a BBL if you are both a sole trader and run a Ltd company?

So one for the company and one as a sole trader?

 

[Mr D]

Within the scheme's rules, can you apply for a BBL if you are both a sole trader and run a Ltd company?

So one for the company and one as a sole trader?

Two businesses? Yes its been done.

 

[Wantinglegaladvice]

Two businesses? Yes its been done.

Thanks. The sole trader account is with Lloyds who have been pretty quick. The account for the Ltd company is with Starling who have been useless and HSBC seem to be taking a while to process applications. Lloyds say they are shut to new business applications, so can I use the sole trader account for applying for the Ltd company and use Lloyds? The application form just asks for an account number and sort code.

 

[Gordon - Commercial Finance]

Something which I heard on a webinar run by one of the funders I deal with last week which I think is quite important.

The BBB will see it as fraud if someone takes a CBILS loan and they already have a bounce back loan, and don't pay it down. Also, if someone applies to this particular lender for a CBILS facility and they do not disclose on their application that they have taken a bounce back loan, they will automatically be reported to CIFAS.

 

[Mr D]

Thanks. The sole trader account is with Lloyds who have been pretty quick. The account for the Ltd company is with Starling who have been useless and HSBC seem to be taking a while to process applications. Lloyds say they are shut to new business applications, so can I use the sole trader account for applying for the Ltd company and use Lloyds? The application form just asks for an account number and sort code.

But that is a different business entity. Different turnover, different details.
Sounds like in your case you are limited to your self employed business.

 

[Wantinglegaladvice]

But that is a different business entity. Different turnover, different details.
Sounds like in your case you are limited to your self employed business.

True, and a different address etc. So it's a case of waiting it out with HSBC unless anyone has had any luck opening a Lloyds business account lately (can't get hold of anyone as the lines are closed).

 

[Wantinglegaladvice]

I was talking to a business manager at NatWest who mentioned a commercial broker could help. Can brokers offer government bounce back loans if your bank can't?

 

[Gordon - Commercial Finance]

I was talking to a business manager at NatWest who mentioned a commercial broker could help. Can brokers offer government bounce back loans if your bank can't?

Nope

 

[Wantinglegaladvice]

Nope

So presumably they'd be offering something themselves, not government backed and probably not as competitive in terms of interest rates. Thanks

 

[bodgitt&scarperLTD]

Looks like we will now have ten years to pay back our BBLs! That’s some cheap money once you take inflation into account. Invested wisely now some will do very well out of this. Others sadly will struggle to pay it back still.