Anecdotally, we hear differing reports from clients and the industry generally about the Bounce Back Loan scheme. Some say it’s working smoothly, others are less sanguine.
Yesterday’s Telegraph Business pages report that “amost 120,000 firms which applied for cash from the flagship rescue programme have either had their applications declined or are still waiting to hear if they will receive help - putting them at risk of going under as the lockdown grinds on.”
More specifically, they cite weaknesses at HSBC, where “more than a third of applications at HSBC, Britain’s biggest bank, have not been approved.”
The emergency Bounce Back Loan funding is handed out by banks but, crucially, backed by the state. This means it is effectively risk free, so banks don’t need to ask for the usual guarantees or security they would normally require for a business loan. In the event of a default/company going bust, it’s taxpayers who will cover all of lenders' losses. Moreover, the loans are interest free for the first 12 months.
The Telegraph article does concede that “Lenders claim to be approving the overwhelming majority of applications quickly, although some have conceded they are dealing with a large number of cases and admit this has caused delays.”
You can read the full article here.
Julie Downie, Accounts Manager, M&S Accountancy & Taxation