Statement from the All-Party Parliamentary Group on Fair Business Banking 

Tens of thousands of businesses left without access to finance

Tens of thousands of businesses at risk of going bust due to lack of availability of the government’s flagship Bounce Back Loans according to the APPG on Fair Business Banking Although a million loans have been provided through the scheme, those businesses who have been encouraged to move to other Fintech firms and ‘non-bank lenders’ now can’t access loans as their finance providers do not have access to the Term Funding Scheme (TFS), which the Bank of England uses to provide cheap money to lend to mainstream lenders and the lenders that can access the scheme are largely closed to new customers.

In a recent survey carried out by the APPG, all banks who offer Bounce Back Loans were either closed to new customers or had technical restrictions that made it difficult or impossible to access loans or long waiting lists to do so. Danske, Lloyds, RBS/NatWest, Santander and TSB were completely closed. Of those who would consider new customers, Barclays, HSBC and Clydesdale were prioritising existing customers and Metro Bank require new applicants to attend a physical appointment.

The APPG on Fair Business Banking is calling on the Treasury, the FCA, mainstream banks and the Bank of England to eliminate the barriers that block non-bank lenders access to the TFS. The TFS is an expansionary monetary policy that provides mainstream banks with wholesale interest rates, which helps transmit the reduced interest rate into the real economy and thus supports growth. Alternatively, the mainstream banks could provide non-bank lenders with funds from the TFS to ‘on-lend’ to their customers or mainstream banks should open access to loans applications from new customers.

The exclusion of non-bank lenders, for example Tide, Capital on Tap, Funding Circle and iwoca, from this scheme leaves a significant portion of businesses from adequate finance, primarily consisting of sole traders and smaller limited companies and others who struggle to access mainstream financing. Tide alone have 80,000 business on their Bounce Back waiting list. Allowing non-bank lenders to utilise the scheme will have a powerful impact on the economic recovery of SMEs after Covid-19 as it will increase competition and availability of SME finance.

Kevin Hollinrake MP said “The Government and mainstream banks have done a brilliant job of delivering one million Bounce Back Loans in record time, but it cannot be right that tens, maybe even hundreds of thousands of businesses are unable to access finance at this crucial time. Quite rightly, we have encouraged the Fintech sector and told SMEs to shop around for their finance needs, but some of those that have are now left out in the cold. We need to address this situation, or we will see many thousands of businesses going to the wall unnecessarily.”

Please see below the results from the APPG survey on mainstream banks who offer Bounce Back Loans.

Open (technically)

Barclays:

• Open to new customers but taking weeks to process

“While you don’t need a Barclays Business current account to qualify for a Bounce Back Loan, we’ll need to establish a business relationship with you before you can apply. We’re currently dealing with a large number of requests, so it might take some time to process your application. If your current bank offers Bounce Back loans, you may get a quicker response if you contact them first.”

 

Clydesdale Bank:

• Open to new customers but prioritising existing customers and can’t provide a time frame

“We’re expecting a high volume of applications and are prioritising our customers who need our support the most. If you’re a new customer, you may wish to speak to your own bank in the first instance as we’re unable to give you a timeframe for reviewing your application.”

 

HSBC

• Open but it takes weeks to apply for an account and draw down a loan

“You don’t need to be an existing HSBC UK customer to apply and you do not need to have a bank account with us in order to apply for, or maintain, this loan. However, please bear in mind it may take longer to process your application as we need to carry out additional checks. If you do not already have an HSBC Business Bank Account and do not want to open one, we will open a temporary feeder account to use to draw down the loan, and will then arrange with you to transfer the funds to another account in your name at another bank (subject to our standard transaction checks).”

 

Metro Bank:

• Open to new customers but you can only apply for a loan if you have a business account with them and have to attend a physical appointment to open one

“We are receiving a lot of enquiries about our business accounts at the moment, so to make sure our services are running smoothly for our existing customers and to keep waiting times to a minimum, we’ve temporarily introduced a new system. You need to visit your local store to speak to one of our colleagues and make an appointment to discuss opening a business account.”

 

Starling Bank

• Open if you leave your current bank but weeks before might be invited to join/apply for a loan

“To manage high demand, we’re prioritising in the first instance established business and sole trader customers, using Starling as their primary account. If you’re interested, please join our list. If you are eligible, you’ll be sent an email inviting you to apply. We can’t guarantee that everyone that joins the list will be invited to apply.

It may be some weeks before customers who have joined the BBLS interest list are invited to apply for a loan and there is no guarantee that everybody on the list will be invited to apply.

 

Closed

 Danske Bank

• Closed to new customers

 

Lloyds Bank

• Closed to new customers:

“We are experiencing high levels of demand and are doing all that we can to support our customers at this time.

If Lloyds Bank do not already currently provide your main Business Current Account, please speak to your main bank for support in the first instance.”

 

RBS/NatWest

• Closed to new customers

“With unprecedented demand we’re currently prioritising existing customers. Bounce Back Loans are available to existing NatWest customers on or before 4 May 2020. If you opened a NatWest Business bank account after this date, you will not be able to apply for a Bounce Back Loan with us.

To access a Bounce Back Loan, please contact your current bank. If they are unable to assist, a list of accredited providers is also available on the British Business Bank website.”

 

Santander

• Closed to new customers

“We’re working hard to do all we can to help our existing business customers who are in urgent need of support under the Bounce Back Loan Scheme. This means that we are currently not accepting new applications for Business Current Accounts, but we will review this position over the coming weeks and further details will be available on our website.”

 

TSB

• Closed to new customers

“We are accepting applications for Bounce Back Loans from existing TSB Business Current Account (BCA) customers only.”