Banks are inundated with ‘bounce back’ loan applications
Banks are inundated with so-called ‘rebound’ loan applications from struggling businesses and independent traders due to the coronavirus outbreak as the program was launched today.
Designed to provide faster liquidity to UK businesses with loans between £ 2,000 and £ 50,000, the initiative requires businesses to complete a ‘standardized’ online form.
Barclays said it received around 200 applications in the first minute since launching this morning, while Lloyds said it received 2,000 applications in the first two hours.
Coronavirus crisis: Small businesses can apply for bounce loans up to £ 50,000 from today
The “rebound loans,” which are 100% government backed, are launched after many companies criticized the government’s business interruption loan program for coronaviruses for its strict eligibility criteria or for the money is not coming fast enough.
To be eligible, businesses must have been in business on March 1 of this year and not have been in financial difficulty since last year.
Businesses that have applied for a business interruption loan but have not yet received the money can switch to the rebound plan.
Mike Cherry, president of the Federation of Small Businesses, said the interrupt loan program has not worked for small businesses because “customer service has been poor, the application process has been arduous, and the delays have been difficult. ‘wait for decisions have been long “.
“The new rebound program offers real hope in this space,” he added.
“We’ve been in foreclosure for several weeks – with many business owners having to pay salaries, utility bills and rent with no income – so its launch can’t come soon enough.”
Businesses will not have to repay these loans in the first year, when the government covers the interest payments. Businesses will start repaying loans after the first year and will be charged 2.5% interest.
Barclays received around 200 applications in the first minute since the program launched
They will also not have to put their house or other personal property as collateral for the banks to grant the loans. But if they cannot repay them, they will be sued by the banks, which will seek to take over property or other assets. If the banks cannot get the money back, the government guarantee will be activated.
The loan term is six years, but businesses can repay them earlier at no additional cost.
The ‘standardized’ online form that businesses must fill out to apply for the loans includes questions about the company’s turnover, whether they have been severely affected by the coronavirus pandemic and how much money they need. .
Jonathan Ratcliffe of the office trade agency Offices.co.uk said they applied for the bounce loans and the process was a little confusing at first but then “extremely easy”.
“Once we started the process with Santander (our bank) things were very simple – the only research I had to do was calculate our turnover in the last fiscal year – and enter about five information such as company number, address, turnover, bank / account details and of course how much we had to borrow – honestly that was really really easy, ”Ratcliffe said.
Businesses can stay with their existing lender or change banks – in the latter case, loans can take a little longer to process.
Matt Hammerstein, managing director of Barclays UK, said the bank approved all 200 requests within minutes of receiving them and expects most loans to be repaid within 24 hours.
The bank had filed about 35 requests per minute in the hours that followed, he added.
Meanwhile, Lloyds said the average loan amount requested so far this morning was around £ 35,000.
Small business tariff relief grants extended to businesses in shared offices
The small business rate relief grants have been extended to businesses that work in shared offices starting today.
Until today, a loophole meant small businesses in shared offices were missing out on a critical £ 10,000 cash grant. But the loophole has been closed, with £ 617million now being made available to tenants of co-working spaces, regular market traders and small charitable properties in England.
This comes after more than 22,000 people have signed a petition against the rules of the program, which means that if you occupy serviced offices where business rates are included (bundled in the package with services), you are not eligible. to Covid-19 support.
The grants are in addition to the £ 12.3 billion provided to UK councils to provide grants of £ 10,000 and £ 25,000 to businesses covered by the trade tariffs.
Emma Jones, founder of the small business support network, Enterprise Nation, said: “It is great news that the government has expanded support for small businesses in shared workspaces and commerce in marketplaces.
“This is exactly the movement we are calling for. As with everything, the devil is likely to be in the details. But we are convinced that this is a big step in the right direction.
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