Small traders fight for survival as BBLS loans take too long to bounce back

While 860,000 have received loans, which are 100 percent backed by the Government, thousands too remain in dire straits fearing they may go bust as their applications are not accepted in the first place, flounder in long holding queues or are rejected.

++ If you’ve been affected by this issue or feel you’ve been a victim of injustice, please contact consumer and small business champion Maisha Frost on [email protected] ++;

Complaints about the varying terms of the scheme, the process and pleas for help have poured into Crusader. 

Calls are growing from all quarters we understand for conditions to be amended, so fewer firms fall through the cracks and for a new, grant-based programme to be set up to catch those still left out.

Although problems vary, the gap is stark between what businesses say they were led to expect from what was billed as a straightforward, fast rescue and the reality they are experiencing. 

Even though the loans have attractive conditions, such as an interest-free first year and then 2.5 percent fixed interest and the chance to borrow up to £50,000 or 25 percent of turnover, within eligibility varies.

Firms’ main complaints centre on waiting times of weeks after making an application, delays getting the money even after approval, not hearing then getting rejected without any explanation, and even in a few cases being offered an overdraft with associated costs instead. 

In some instances insensitive lenders’ jargon such as “you do not fit our risk appetite” has rubbed salt into wounds and, in the face of silence, some business owners have wondered if the real reason is the money has already run out.

However the government is guarantor supplying lenders via the British Business Bank so this is not the case at present.

Account status and credit checks are proving unexpected stumbling blocks.

The loan would change everything. I could keep my studio and my equipment, keep producing and grow my business – everything that was happening before the pandemic

Elizabeth Welch

Many small traders, perfectly legally, run their affairs through their personal accounts, something possible under BBLS rules. 

But they then find they do not have sufficient tax returns information, or need to set up a new business account to access the scheme’s funds, something that is proving nigh on impossible, not least because of the colossal demand.

Businesses then resort to going from lender to lender in debilitating, last ditch searches to survive. 

Fraud, anti-money laundering (AML) and Know Your Customer (KYC) checks are required and made.

But past, often small, personal credit problems paid off years ago are scuppering hopes too. 

Credit reference agency Experian warns: “As bounce-back loans are backed by government, applying for one won’t generally trigger a credit check and, as a result, won’t leave a hard footprint on your credit report. However, most banks are only providing bounce-back loans to existing customers, so new customers must first apply for a business bank account and undergo a credit check. 

“This means that customers who are shopping around for bounce-back loans do have to be careful because multiple credit checks, and therefore hard footprints, are not good news for credit scores.”

Artisan Elizabeth Welch in West Sussex, whose dazzling wildlife glass sculptures are becoming collectibles, is among many cases we are raising with lenders.

Her sales through galleries and trade fairs have been wrecked.

But an HSBC customer for 16 years and with a business account and no credit issues, she has been waiting to hear about a £10,000 BBL.

This relatively modest support would make a world of difference, she says. 

 “The loan would change everything. I could keep my studio and my equipment, keep producing and grow my business – everything that was happening before the pandemic,” she says. 

HSBC UK confirmed: “We are looking at these complaints as a matter of urgency. We’ve approved over 128,000 BBLs so far. As one of the few banks accepting applications from businesses that aren’t currently our customers, we’ve been inundated with requests to open accounts. As a result, the wait times for new accounts are significantly longer than they were pre-COVID-19.”

After a wait following loan approval, property company Arrive Homes, a NatWest customer for 11 years, should now get the funds within days.

“It will mean survival,” said director Philip Tierney when he thanked us for our support.

UK Finance, the body representing the finance and banking industry, said: “Lenders are providing an unprecedented level of support to firms affected by the COVID-19 crisis.

“Over 860,000 businesses have so far received a total of £26.3 billion in loans through the Bounce Back Loan scheme – an average of more than 140,000 approvals each week, with the vast majority of applicants being able to rapidly access the finance they need. Recent research showed that almost nine in 10 SMEs have had their applications for a Bounce Bank Loan (BBL) facility approved where a final decision has been made, higher than the industry average of eight out of ten for all loan applications from SMEs.”

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