Small businesses blocked out of bounce back loans scheme
Small businesses are struggling to access essential funding through a Government-backed loan scheme because lenders are blocking their applications.
The Government-sponsored bounce back loans scheme was supposed to be a lifeline for businesses struggling to make it through the coronavirus pandemic, but reports suggest that many are struggling to get their hands on essential cash.
The loans are 100% backed by the Government and Chancellor Rishi Sunak recently extended the application deadline to the 30 November, though many businesses report being stonewalled by the banks.
This week, the National Audit Office warned that up to £26bn of the £38bn already loaned out under the bounce back scheme may never be paid back due to company failures and suspected criminal activity. Now, it seems that many lenders have either stopped offering bounce back loans or are restricting access to business customers that already have a bank account.
City AM reports that just five of the 28 accredited lenders are currently accepting bounce back loan applications. HSBC recently shut applications to new customers saying that it needed to process outstanding loan decisions before accepting new requests.
Experts and commentators are worried that new compliance systems introduced to guard against fraud may be making it much more difficult for genuine companies to get a loan. Some business customers that have been rejected by their own banks have resorted to setting up accounts with new banks, but this is also slow-going as financiers deal with long customer waiting lists.
Under the bounce back loan scheme, businesses can apply for up to £50,000 in loans. The Government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be set at 2.5% a year for a period of up to ten years.
Unsure if your business will be approved for funding? One of our accountants will be able to advise you on the best course of action to support your business. Speak to a member of the CloudAccountant.co.uk team today. Call: 0808 281 0303.