The Bounce Back Loan Scheme was recently extended until the end of January. However, getting one might prove difficult.
That’s because reports suggest that there are no high street banks open for Bounce Back Loan applications anymore.
This means that despite the extension, accessing a bounce back loan is almost impossible right now.
Why Aren’t Banks Taking New Applications?
Out of the 28 accredited lenders, only Starling bank were offering Bounce Back Loans at the start of November.
However, a spokesperson from Starling has shared that not everyone on their waiting list is even guaranteed a loan.
So what seems to be the problem?
Well, banks are choosing to no longer accept new customer applications for Bounce Back Loans because they are being swamped by struggling businesses.
This will be a big hit to hopeful businesses, because over 90% of Bounce Back Loans (that have already been given out) came from the big five banks – Barclays, Santander, Lloyds, Natwest & HSBC.
Now, these banks are essentially refusing to accept new customer applications.
Solving The Problem
In order to get this situation sorted, bankers have started a conversation with the Treasury and the British Business Bank.
The goal is to find a way forward! Let’s get these loans flowing once more to businesses who really need it during the winter months!
However, the Treasury’s stance is simple: Banks must reopen applications as soon as they practically can. Yet, the high street banks are unwilling to budge. Nothing seems to be able to shift either party, leaving desperate businesses in the middle of it all.
Non-high street banks face their own problems too. Banks like these don’t benefit from the cheaper Bank of England funding that the high street ones do.
That’s why these banks are also unwilling to accept any new applications. They want the government to directly fund the scheme themselves (much like they are doing through the Coronavirus Job Retention Scheme and SEISS).
While all of this is going on existing customers and potential new customers are left like ‘sinking ships’ in the middle of a nationwide lockdown.
The Loan Top-Up
There is only one small glimmer of hope for businesses that have already applied for a Bounce Back Loan.
If you are a businesses, who has already taken out a Bounce Back Loan, then you can ‘top up’ the old loan to a maximum of 25% of the business’ turnover (capped at £50,000).
This top up solution is only allowed to be activated once per loan. So let’s hope that a solution is landed on before this wave of businesses require more help too.
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