Lloyds deliver £1bn Bounce Back loans

Lloyds Banking Group has announced that it has already paid more than £1 billion to small businesses as part of the Government’s Bounce Back Loans Scheme (BBLS),  following its launch on Monday (4th May).

The lender says that more than 32,000 of its small business customers applied.

RBS said that it had received 58,000 Bounce Back loan applications on Monday and Tuesday, with an average loan of £37,000, while Santander said it received 27,591 applications by yesterday afternoon and over 68,000 businesses had asked HSBC for loans as of Tuesday (5th May) evening.

Meanwhile, some applicants said Barclays’ systems were struggling to keep pace with demand, with some taking to social media to complain of error messages. Despite the issue, Barclays has approved 32,000 bounce back loans.

The banks have reported that an average loan is about £30,000, the support is calculated to have hit £3.3 billion on day one.

Gareth Oakley, Managing Director of Business Banking, Lloyds Banking Group said “We’re proud to play our part in supporting the lifeblood of the British economy at this crucial time. More than 32,000 of our small business customers applied for a bounce back loan on Monday and received the money on Tuesday. We’ve lent over £1 billion so far through this scheme and, as more businesses apply, that will grow in the coming days.”

Stephen Jones, Chief Executive of UK Finance, said “Bounce Back Loans form a key part of support measures put in place by the government, working with the banking and finance industry to help businesses through these difficult times. This scheme gives smaller businesses including sole traders rapid access to debt finance if they need it. Bank staff have been working flat out since the scheme launched on Monday morning to process applications and get money out to eligible borrowers and these figures are testament to their hard work and the commitment of the industry to support businesses of all sizes.”

“While businesses only need to fill in a simple form online to apply, it’s important to remember that this type of finance is debt, not a government or bank grant, and will need to be repaid by the borrower over the six year term of the loan. All businesses should consider carefully their repayment obligations before completing a Bounce Back Loan application. Under the terms of the scheme lenders are required to seek to recover any unpaid interest and principal on Bounce Back Loans from borrowers.”

“Lending through the BBL scheme is just one way we’re supporting our business customers impacted by COVID-19. Over 14,000 businesses have had their overdrafts extended and we’ve granted over 25,000 capital repayment holidays since the pandemic began.”

Federation of Small Businesses (FSB) National Chairman Mike Cherry said “The BBLS has come out of the blocks strong – enabling £2 billion of small business lending in its first day, a sum that took its predecessor loan scheme weeks to achieve. ”

“Given the nature of this initiative and the sheer volume of day one applicants, it was always going to be led by the big four in its early phase.”

“From here though, it’s important that efforts to increase competition in the small business banking market are maintained. More banks and alternative lenders need to be accredited to the BBLS. The Treasury, British Business Bank and Bank of England should work together on how this can be best achieved.”

“Unfortunately, we are hearing reports that bounce back application forms are hard to access or enquiries are simply being acknowledged with a “we’ll call you” message and nothing further.”

“Many of the most vulnerable business owners – particularly sole traders – only have personal banks accounts and, as a result, are being told that they can’t access a bounce back loan. It’s vital that they are helped to secure the finance on which many will depend to make it through this incredibly challenging time.”

“All in all it’s a very promising start, but there’s still work to do.”

Separately, concerns have been raised that a lack of uptake for the Government’s Bounce Back Loan Scheme (BBLS) by lenders may mean small firms hit by the coronavirus crisis are at risk of missing out on support. So far, just eight banking groups been authorised to handle applications for the scheme, and most are restricting loans to their own business customers. This raises the possibility that small businesses in need of finance will face delays unless they bank with the larger lenders .

Suren Thiru, head of economics at the British Chambers of Commerce, said “The low number of accredited lenders is troubling as it could see firms who use other lenders effectively locked out of the scheme.”