Bounce Back Loan

[jewelsuk]

I have a small ecommerce business selling jewellery online only. I established my ecommerce business in late November 2019, just about 3 months before the pandemic began, and has been trading since. I made about £8,000 alone last year despite that I only operate online. I don't advertise my business anywhere either. I only post my products on social media, which is free advertising. So to make about £8,000 for my first year as a one-person startup business throughout the pandemic, who only trades online and no advertisement, is very impressive. I think. So my business has a potential.

But this year since January, my business has been badly affected by the pandemic. So late last month I decided to apply for a BBL (Bounce Back Loan) from my bank, which is Barclays. But they rejected my application! Although I had provided them all documents they requested to prove that I have been trading since November 2019. So, I don't understand why my application was being declined?! They didn't send me any letter either to confirm their decision to reject me, and to explain the reasons why my BBL was being rejected. Therefore I think something is not right here.

So my questions are:
1. Does anybody experience the same thing with BBL?
2. What help can I get in terms of BBL, and that my bank rejected my BBL?
3. Where can I get help to complain about my bank's rejection of my BBL?
4. Are there other financial helps for small (ecommerce) businesses?

Sadly, if I don't get any financial help, I may have to close down my business. I can't just go on.

Any help would be appreciated. Thanks.

 

[Mr D]

Banks usually do not tell you why rejected, saves you gaming the system.

Perhaps you did not qualify. Perhaps they did not accept your figures.
Perhaps they did not accept your reasons. Or perhaps failed credit check.

Complain to the bank you wish. It's their loan. Presumably still will not change anything.

Perhaps the bank would be concerned with an online business doing well in its first year suddenly being affected by the pandemic since January. Is that actually the pandemic or is it January?
Sales for many businesses drop off in quarter 1 - every year. Nothing to do with pandemic.

 

[japancool]

1. Does anybody experience the same thing with BBL?

Lots and lots of people.

2. What help can I get in terms of BBL, and that my bank rejected my BBL?

You can apply for a BBL with another bank, but you might be struggling to find one that will accept an application. Most banks are only allowing BBLs for existing customers.

If all else fails, there are two things you can try.

1) Email the Barclays CEO directly to complain. This has resulting in some positive outcomes for people.
2) Write to your MP and ask them for help to get the bank to reconsider its decision.

3. Where can I get help to complain about my bank's rejection of my BBL?

Nowhere.

4. Are there other financial helps for small (ecommerce) businesses?

Your local council has a fund to provide discretionary grants. Check their eligibility criteria and if you qualiy.

 

[jewelsuk]

Hi, thanks for all your replies. I have read already from the British Business Bank website that they don't do credit check for BBL.

I have also read an article that says: "After getting her MP involved, Metro Bank confirmed that Ellie’s credit history was the reason for her rejection for an account." and “Under BBLs, lenders will not turn down applications for purely credit or affordability-related reasons,” a British Business Bank spokesperson told City A.M. Automated systems – some of which can also undertake credit checks – will, however, be used for the purposes of validating information, as well as identifying and stopping potentially fraudulent applications for the scheme”, they said.

Just search for the article on this site "cityamdotcom"
On the brink: SMEs cut off from bounce back boans as banks close to new customers

So, it has nothing to do with credit score. Also, BBL will not do credit check according to the articles above, and if the lenders do perform a credit check of yours, it should not affect your BBL application.

 

[japancool]

Perhaps they did not accept your figures.

They're supposed to accept your self-certified figures.

Or perhaps failed credit check.

A BBL should not require a credit check.

The ONLY thing that should matter is that you were trading before a certain date.

 

[japancool]

I have also read an article that says: "After getting her MP involved, Metro Bank confirmed that Ellie’s credit history was the reason for her rejection for an account." and “Under BBLs, lenders will not turn down applications for purely credit or affordability-related reasons,” a British Business Bank spokesperson told City A.M. Automated systems – some of which can also undertake credit checks – will, however, be used for the purposes of validating information, as well as identifying and stopping potentially fraudulent applications for the scheme”, they said.

Frankly, the British Business Bank is not fit for purpose. They're supposed to be administering this scheme, but they let the banks do whatever the hell they want, instead of following the stated government rules.

According to the government, you do NOT have to be a customer of a bank to apply for a BBL. But most banks are only allowing you to apply if you have a business account with them - and most have stopped allowing new applications. Lloyds allows new applications, but new applicants have to sign up to a clause that says they're not allowed to apply for a BBL with Lloyds.

 

[jewelsuk]

I have a personal account with Barclays that I opened about 2 years ago, which I use for my business as well. I have shown them my personal bank statements how much I earn from my business. So, it's not something I made up how much I made last year. They can check that themselves.

 

[japancool]

Then get your MP involved, and hope that you have an MP who gives a toss.

Mine just gave me a boilerplate reply from the business & industry department.

 

[jewelsuk]

Frankly, the British Business Bank is not fit for purpose. They're supposed to be administering this scheme, but they let the banks do whatever the hell they want, instead of following the stated government rules.

According to the government, you do NOT have to be a customer of a bank to apply for a BBL. But most banks are only allowing you to apply if you have a business account with them - and most have stopped allowing new applications. Lloyds allows new applications, but new applicants have to sign up to a clause that says they're not allowed to apply for a BBL with Lloyds.

Yes, I agree. It seems, the banks could just do whatever they want in terms of BBLs. Nobody intervenes that this is not right. Many small businesses are the ones that are being hurt the most when it comes to BBLs.

 

[Mr D]

They're supposed to accept your self-certified figures.



A BBL should not require a credit check.

The ONLY thing that should matter is that you were trading before a certain date.

They asked me for turnover in 2019. So used those figures.

This was in the early days when money was being chucked around. Have heard multiple times since that they do a lot more rejections now than they did in May.

Should not require - but banks will not be open about all the reasons they turn someone down.

 

[JustGettingOnWithIt]

I have a personal account with Barclays.

Personal account will be why. You need a business account

 

[Mr D]

Yes, I agree. It seems, the banks could just do whatever they want in terms of BBLs. Nobody intervenes that this is not right. Many small businesses are the ones that are being hurt the most when it comes to BBLs.

Its banks lending money that they hope to recoup via you or via government. So more willing to splash it around than if its just their money.
However its still a risk for them.

Not sure why someone should intervene - do people normally intervene in your business matters if a decision goes against you?
Its a bank - if they won't give money out then look at other ways of getting money, other ways of selling your goods.
To be honest I'm surprised you did so much with just social media - but far from the only method of marketing.
The business has lower sales - so figure out how to reverse that. If it can be reversed.
Or if its just the time of year.

 

[Mr D]

Personal account will be why. You need a business account

Barclays will allow personal account.

However - this is possibly why.

An online copy of your submitted 2018/2019 self-assessment tax return, or • A scanned paper copy or online copy of your SA302 tax calculation produced by HMRC for the 2018/2019 tax year • Three 3 months Barclays bank statements dated December 2019, January 2020 and February 2020, which show evidence of trading. The bank statements must clearly show business transactions relating to the business for which you are applying for a Bounce Back loan. Make sure the document includes your UTR (unique Tax Payer Reference) and shows your business income.

 

[JustGettingOnWithIt]

Barclays will allow personal account.

Ah ok. I've learned something. I thought it was a no no to trade from a personal account.

 

[Mr D]

Ah ok. I've learned something. I thought it was a no no to trade from a personal account.

Generally the bank can shut the personal account down. Depends how little they want your custom

 

[jewelsuk]

Barclays will allow personal account.

However - this is possibly why.

An online copy of your submitted 2018/2019 self-assessment tax return, or • A scanned paper copy or online copy of your SA302 tax calculation produced by HMRC for the 2018/2019 tax year • Three 3 months Barclays bank statements dated December 2019, January 2020 and February 2020, which show evidence of trading. The bank statements must clearly show business transactions relating to the business for which you are applying for a Bounce Back loan. Make sure the document includes your UTR (unique Tax Payer Reference) and shows your business income.

It did ask me for my 3 months bank statements which I already gave to them from Dec 2019, Jan and Feb 2020. But they didn't ask me for my 2018/2019 self-assessment tax return, or • A scanned paper copy or online copy of your SA302 tax calculation produced by HMRC for the 2018/2019 tax year, though.

 

[ecommerce84]

When you say ‘made £8k’ do you mean you had revenue of £8k or profits of £8k?

The BBL requires you to have a minimum loan of £2000 and up to a maximum of 25% of turnover.

If your turnover is £8k, and you’ve rounded that up, you’ll be ineligible as the £2k minimum will be over 25% of your turnover.

 

[japancool]

It did ask me for my 3 months bank statements which I already gave to them from Dec 2019, Jan and Feb 2020. But they didn't ask me for my 2018/2019 self-assessment tax return, or • A scanned paper copy or online copy of your SA302 tax calculation produced by HMRC for the 2018/2019 tax year, though.

They shouldn't need that. It's a BBL, not self-employment income support. You're supposed to self-certify your turnover.

 

[Mr D]

It did ask me for my 3 months bank statements which I already gave to them from Dec 2019, Jan and Feb 2020. But they didn't ask me for my 2018/2019 self-assessment tax return, or • A scanned paper copy or online copy of your SA302 tax calculation produced by HMRC for the 2018/2019 tax year, though.

Yes, no need for them to have your tax return for a period before you started trading and you supplied what they wanted.
18/19 tax return / tax calculation would apply if you were trading in the period Apr 2018 to Mar 2019.

 

[Mr D]

They shouldn't need that. It's a BBL, not self-employment income support. You're supposed to self-certify your turnover.

IBIM10160_BBLS.pdf (barclays.co.uk)

Thats what they ask for.
Perhaps to reduce the fraud. Perhaps government told them to tighten up.

 

[Aniela]

It did ask me for my 3 months bank statements which I already gave to them from Dec 2019, Jan and Feb 2020. But they didn't ask me for my 2018/2019 self-assessment tax return, or • A scanned paper copy or online copy of your SA302 tax calculation produced by HMRC for the 2018/2019 tax year, though.

Do the bank statements show a lot of business transactions? The lenders are checking for sufficient activity in the account itself to show you were running a business. If all your sales were on eBay and paid to Paypal for example, and you only have say 4 transactions coming into your bank directly, it can be refused on that basis.

They shouldn't need that. It's a BBL, not self-employment income support. You're supposed to self-certify your turnover.

While BBL's are self-certified for the turnover, the lenders are still are required to run standard fraud checks. Plus, they technically can choose who they wish to accept an application from. Part of their decision for that, can be if there is a business actually operating. A lender may decline an application if they're seeing no business transactions being made for the last weeks/months etc.

 

[japancool]

While BBL's are self-certified for the turnover, the lenders are still are required to run standard fraud checks. Plus, they technically can choose who they wish to accept an application from. Part of their decision for that, can be if there is a business actually operating. A lender may decline an application if they're seeing no business transactions being made for the last weeks/months etc.

Assuming you pass the fraud checks, which the OP appears to have done, there is no reason why you should then be declined for a BBL.

 

[Mr D]

Assuming you pass the fraud checks, which the OP appears to have done, there is no reason why you should then be declined for a BBL.

We don't know what level of turnover the bank statements supported.
We don't know all the criteria the bank were using in decision making.

 

[Aniela]

Assuming you pass the fraud checks, which the OP appears to have done, there is no reason why you should then be declined for a BBL.

They can decline you for whatever reason they wish. They don't have a legal obligation to accept loan applications if they meet all the requirements. At the end of the day, it's still a lender offering a loan product.

They can decline you even if eligible, for any reason.

Maybe it's not an industry they wish to lend to. Maybe they feel the business is actually not operational any more. Maybe they feel the business doesn't support the loan amount requested.

The lenders still have the legal responsibility to lend responsibly; even if someone meets all the criteria.

This person also stated they're using a personal account. This could actually be part of the problem. Some lenders such as HSBC will setup a new business bank account or feeder account to process the BBL, if a personal account has been used. To open the new bank account, credit checks can be made... I've heard of people being declined due to that. Failing the credit check for the opening of a new business account.

Lenders aren't allowed to do credit checks for the BBL itself, but that doesn't apply to opening of a new account where credit checks can be made.

 

[japancool]

Maybe they feel the business doesn't support the loan amount requested.

They're not supposed to be verifying turnover. That's the whole point of self-certification.

To open the new bank account, credit checks can be made... I've heard of people being declined due to that. Failing the credit check for the opening of a new business account.

He didn't say he was declined for a new account. He said he was declined for a BBL.

 

[Interestedobserver]

I have a small ecommerce business selling jewellery online only. I established my ecommerce business in late November 2019, just about 3 months before the pandemic began, and has been trading since. I made about £8,000 alone last year despite that I only operate online. I don't advertise my business anywhere either. I only post my products on social media, which is free advertising. So to make about £8,000 for my first year as a one-person startup business throughout the pandemic, who only trades online and no advertisement, is very impressive. I think. So my business has a potential.

But this year since January, my business has been badly affected by the pandemic. So late last month I decided to apply for a BBL (Bounce Back Loan) from my bank, which is Barclays. But they rejected my application! Although I had provided them all documents they requested to prove that I have been trading since November 2019. So, I don't understand why my application was being declined?! They didn't send me any letter either to confirm their decision to reject me, and to explain the reasons why my BBL was being rejected. Therefore I think something is not right here.

So my questions are:
1. Does anybody experience the same thing with BBL?
2. What help can I get in terms of BBL, and that my bank rejected my BBL?
3. Where can I get help to complain about my bank's rejection of my BBL?
4. Are there other financial helps for small (ecommerce) businesses?

Sadly, if I don't get any financial help, I may have to close down my business. I can't just go on.

Any help would be appreciated. Thanks.

I don't get why your business can't go on?

What actual costs do you have each week?

How much time do you have to put into the business each week?

What would you spend the loan on?

Does your business owe money to someone?

Or do you actually mean you can't go on without more income?

Could you not just get another job/income and carry on selling the jewellery alongside that?

Surely you've already done the hard part setting up the online shop?

What am I missing?

 

[Aniela]

They're not supposed to be verifying turnover. That's the whole point of self-certification.

You self-certify turnover for affordability and loan amount eligibility.

That doesn't mean turnover or transactions can not be requested for fraud purposes or other checks. They can request statements just to ensure you're actually using their banking services.

People have been declined because they actually use a different provider for the bulk of their transactions etc. Again, they're offering a loan product so there are things they can request outside of the scope of the BBL itself.

He didn't say he was declined for a new account. He said he was declined for a BBL.

They clump into into one for whatever reason and usually don't make it clear why you're declined, until you reach out. If they do require a business bank account for the BBL, and it gets declined, they usually just say your BBL was declined.

 

[Mr D]

I don't get why your business can't go on?

What actual costs do you have each week?

How much time do you have to put into the business each week?

What would you spend the loan on?

Does your business owe money to someone?

Or do you actually mean you can't go on without more income?

Could you not just get another job/income and carry on selling the jewellery alongside that?

Surely you've already done the hard part setting up the online shop?

What am I missing?

Having sold in the same field as the OP for over 10 years with me and the wife making our own pieces, we often found January to be quiet.
Certainly a lot quieter than the run up to Christmas. Perhaps the bank simply was not convinced.
Still it's not the end of the world. The OP can expand marketing, look at different sites to sell on and even prepare for offline sales in the future.

 

[japancool]

That doesn't mean turnover or transactions can not be requested for fraud purposes or other checks. They can request statements just to ensure you're actually using their banking services.

You do not have to be a customer of a bank to apply for a loan, according to the DWP.

If they really believed you were being fraudulent, they'd close your other accounts and refuse to do business with you at all. It's an excuse.

They clump into into one for whatever reason and usually don't make it clear why you're declined, until you reach out. If they do require a business bank account for the BBL, and it gets declined, they usually just say your BBL was declined.

No. All the lenders that I've approached about it require you to open a business bank account, THEN apply for a BBL.

 

[Aniela]

You do not have to be a customer of a bank to apply for a loan, according to the DWP.

If they really believed you were being fraudulent, they'd close your other accounts and refuse to do business with you at all. It's an excuse.

That's a swing and roundabouts situation.

Technically, you don't have to be a customer of a bank to be eligible to apply. But the lenders can choose who can apply... so it's irrelevant really.

Just like the eligibility criteria for the loans being somewhat irrelevant. You could be eligible for the loan in every way shape and form, but the lenders can refuse the application because they don't want to offer you the loan product.

Most lending providers were/are requiring you to be an existing customer or they require you to make them your main banking provider for the business if not. This is relaxing a bit more-so now.

It's an excuse for what? Yes, in theory if they caught your making fraudulent claims, they could close any other accounts you have with them. Not sure what difference that makes to anthing.

No. All the lenders that I've approached about it require you to open a business bank account, THEN apply for a BBL.

What do you mean, no? What I said was happening. Just because you've approached certain lenders and not seen it, doesn't mean it hasn't happened. It was a massive issue back when the flood gates opened on BBL.

 

[japancool]

What do you mean, no? What I said was happening. Just because you've approached certain lenders and not seen it, doesn't mean it hasn't happened. It was a massive issue back when the flood gates opened on BBL.

TSB, Natwest, Lloyds, AIB, Santander, Barclays, HSBC, Halifax all required you to open an account first before applying for a BBL. I'd say that was a fair reflection of what was happening.

 

[Aniela]

TSB, Natwest, Lloyds, AIB, Santander, Barclays, HSBC, Halifax all required you to open an account first before applying for a BBL. I'd say that was a fair reflection of what was happening.

Like I said, just because you haven't seen something happening, doesn't mean it wasn't happening.

You're talking about a specific moment in time and have no clue what you're talking about outside that.

 

[japancool]

Like I said, just because you haven't seen something happening, doesn't mean it wasn't happening.

You're talking about a specific moment in time and have no clue what you're talking about outside that.

I've been following the requirements for Bounce Back Loans since the beginning, and I know what's been happening. It's been widely reported. You're the one who doesn't have a clue. I think it's best if I don't waste my time with you. Ignored.

 

[Aniela]

I've been following the requirements for Bounce Back Loans since the beginning, and I know what's been happening. It's been widely reported. You're the one who doesn't have a clue. I think it's best if I don't waste my time with you. Ignored.

Clearly you don't but that's fine. People were getting declined left, right and centre for a long time. Sounds like you were too if you were contacting lots of lenders about it.

If you want to ignore facts, that's your choice.

(On a side note, you may want to change the checkout settings on your eCommerce store. It's currently got a flawed process to order. People can't order the item in their basket straight away. They're stopped from ordering. They are re-directed away to signup, which takes them out of the purchase flow. You need to accept guest checkouts or allow registration during purchase directly.)

 

[DEFCON1]

I think the most likely reasons were that you weren’t trading long enough and your revenue was too low to qualify.
What I don’t understand is, why did the Pandemic harm your business if you were only trading online?

 

[Mr D]

I think the most likely reasons were that you weren’t trading long enough and your revenue was too low to qualify.
What I don’t understand is, why did the Pandemic harm your business if you were only trading online?

Lots of online businesses impacted negatively by the pandemic.

 

[Aniela]

I think the most likely reasons were that you weren’t trading long enough and your revenue was too low to qualify.
What I don’t understand is, why did the Pandemic harm your business if you were only trading online?

Been major delays on getting stock into the country for some products. Some people are expecting months of delays to get products.

 

[qqcs]

Is there a ltd director's personal security involved in BBL?
I have checked the application but looks like 6 years with 1 year interestfree and repayment free period by default. Is it possible to modify these period?

 

[japancool]

Is there a ltd director's personal security involved in BBL?

No. No personal guarantees are involved.

 

[DEFCON1]

Is there a ltd director's personal security involved in BBL?
I have checked the application but looks like 6 years with 1 year interestfree and repayment free period by default. Is it possible to modify these period?

Can be extended to 10 years.
Or, repaid earlier with no penalty.