Thousands of UK businesses ask for ‘top-ups’ to collect their loans
Thousands of struggling businesses on Tuesday asked UK banks for extra money through state-guaranteed ‘rebound’ loans as England entered the first full week of the new nationwide lockdown.
Last week the chancellor relaxed the rules around government loan support programs to help businesses manage cash flow through the next stage of the pandemic.
From Tuesday, lenders in the Bounce Back Loan Scheme (BBLS) were able to offer small businesses in the UK a ‘top-up’ to existing loans if they initially borrowed less than the maximum amount they had available. Mr. Sunak also extended all government-backed loan programs until the end of January.
The UK’s largest banks said on Tuesday that requests for top-ups had only been in the few thousand as existing customers signed up to receive additional funds. Two major banks said there were around 2,000 requests for more money in the early hours of the program that went live on Tuesday morning.
At a lender at 9 a.m., call volumes were up by a quarter and online chat by 45% from Monday. Someone from another lender said the bank had been busy but they added it was not the same kind of demand flow seen at the start of the program which threatened to create a long backlog.
The UK’s largest lenders – Lloyds, TSB, NatWest, HSBC, Santander and Barclays – account for around 90% of the £ 40bn of the 1.3m loans made so far under the loan scheme rebound. This debt is fully guaranteed by the UK government.
A number of non-bank lenders are also offering bounce loans, although not all have yet opened up to customers to offer the top-ups as part of the program. As of Tuesday afternoon, 17 of the 28 lenders accredited under the program offered add-ons, with more expected to join later this week. But that still left hundreds of borrowers without access to top-ups if they were needed.
A spokesperson for Santander, which in total has approved more than £ 4.5bn for major lending programs, said: “Since the launch this morning we have seen over 1,500 applications for top-up credit via our online application form. ” The application process was only put online on Tuesday evening for TSB customers.
Top-ups are only available from a borrower’s existing lender, questions remain about the lack of availability for new borrowers as almost all banks have stopped offering new business loans under the program .
Some banks fear taking many more borrowers for bounce loans granted the high risk of fraud or default. The program provides borrowers with £ 50,000 in state-guaranteed loans with minimal checks on their creditworthiness.
A borrower can request a top-up of up to 25 percent of the annual turnover they certified in their original BBLS application form, less the value of their original loan. The capital repayment holiday runs for 12 months from the date of the initial withdrawal rather than at the time of recharging.