Banks flooded with applications for Bounce Back Loans
The government’s Bounce Back Loan scheme allows small firms and sole traders such as hairdressers, coffee shops and florists to apply for a 100% state-backed loan up to £50,000, capped at 25% of a company’s turnover, interest free for the first 12 months.
The scheme launched on Monday morning and more than 69,000 Bounce Back Loans worth over £2bn were approved during the first 24 hours, the Chancellor confirmed.
The seven largest lenders (Barclays, Danske, HSBC, Lloyds, RBS, Santander and Virgin Money) received more than 130,000 Bounce Back Loan applications on the first day of the scheme.
Barclays reported that as of 2pm on Monday, 6,000 loans had been approved, at a value of £200m. Funds were expected to land in accounts on Tuesday. By 4pm on Tuesday, it approved over 32,000 loan requests.
As of 4pm on Monday, HSBC said it received 34,500 applications – 19,800 from existing customers, totalling £650m, and 14,700 from new customers.
Lloyds confirmed it received 32,000 applications on Monday, with 2,000 requests in just the first two hours of launch. The average loan amount stood at £30,000 and today it has paid out £1bn.
RBS said it received 60,000 applications over the first two days of the scheme, worth £2.2bn. The average loan size is £37,000.
Santander received 19,977 applications, offering 15,414 loans worth £431m. The first customer had the money in their account at 10am on Monday morning.
Bounce Back Loans
The loans are available from banks as well as accredited lenders. A full list can be found on the British Business Bank website and firms can also apply for the Bounce Back Loan there.
Loans are subject to a flat rate of interest of 2.5% but the government will cover the cost of fees and interest for the borrower for the first 12 months and no payments will be due during this period to enable firms to get back on their feet.
However, borrowers remain 100% liable for the debt. Loan terms will be up to six years, though early repayment is allowed without early repayment fees.
Business owners who have already applied for the Coronavirus Business Interruption Loan of £50,000 or less can apply to have it switched over to the Bounce Back Loan. This must be done by 4 November 2020.
The loan is 100% backed by the government and forms part of a £7.5bn package of support for businesses and jobs during the pandemic.