Bounce Back Loans: The fastest path to SME cash
After the government announced the release of the Bounce Bank Loans Scheme (BBLS), I thought it would be another application I could support my clients with and that I would be able to process their application. This wasn’t the case. Each BBL needs to be processed by the client themselves through their online banking account.
BBLS v CBILS
Clients who initially applied for the CBILS have now moved their application to BBLS if applying for under £50,000. Being 100% by the government rather than CBILS 80% makes the move a decided positive. 100% of my clients who have applied for the CBILS still haven’t had information from the bank for approval. It is now week six later.
Not all of the clients initially wanted to go for a loan because they were concerned about the interest rates on offer. With the capped 2.5% by the government and a 12 months repayments and interest holiday, the loan is much more manageable and gives them some breathing space to get their businesses back up and running.
Where we helped clients with cashflow, we saw a clear indication that financial pressures will peak between 9 and 12 months. Deferred payments will be due by then. Our stance with clients is to put tax money aside to pay when it falls due.
Application of BBLS funding
The funds from the BBLS is to ensure business continuity. These are extreme emergency measures provided by the government. Where there is an alternative agenda for the use of funds, HMRC may raise an inspection at a later stage.
There are no real guidelines on how the funds are to be used. Clearly needs to be used smartly and spread over several months to make sure businesses are able to continue trade.
Being completely backed by the government makes BBLS the most logical option. After speaking with clients, they feel more comfortable with BBLS than opting for a direct bank loan at a later stage. A loan later on may prove difficult with credit ratings, should their business have reduced profits.
BBLS should have definitely been on the cards from the start. Clients have done their own applications with most lenders, and have found it straightforward.
Lenders application of BBLS
Santander application took around twenty minutes to complete. Where applications processes had started at 6.30 am, Santander already had sent the paperwork over to them 4 hours later, and had approved 2.5 hours after this. The funds were in the account by 2 pm. This is an incredible speed to turn around a loan application, and there were clear, simple instructions from Santander on how to complete.
With Starling Bank, you have to register online to show interest and they will get back to you.
Lloyds applications also seemed to be quite straightforward and easy. But finding the application page on their website was not so easy.
I have access to a Barclays account for a few clients and was authorised to apply on their behalf. I checked at 6 am to see if I could apply, but there was nothing available. I had to call the bank who advised me that Barclays were slowly releasing the online application to customers. When I finally did get access, it crashed. As of this morning (Tuesday 05 May), Barclays BBLS have still been unsuccessful.
BBLS: 24 hours later
Monday was an intense period because we know that clients need to have funds in their accounts. With the uncertainty of CBILS coming in, knowing that BBLS has launched and the cash can be received in 24 hours makes a huge difference. This is only the case for customers who require under £50,000. We still need to apply pressure to the banks for the clients who have requested a higher amount as they will need this to come in quite fast.
When it was announced that BBLS funds would be released within days, I honestly did not believe this could happen. It was a pleasant surprise when Santander sent the funds in under seven hours. I would like to think that banks can adopt this new process going forward.
