Staff Writer AccountingWEB
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Bounce Back loans start flowing within hours

Businesses started applying for help under the Bounce Back Loan Scheme (BBLS) this morning (Monday 4 May) after the Chancellor set out the basic terms in a letter  on Friday afternoon.

4th May 2020
Staff Writer AccountingWEB
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Chancellor of the Exchequer Rishi Sunak (middle) with Stephen Barclay Chief Secretary to the Treasury (right) are briefed outside the cabinet room

Chancellor Rishi Sunak’s eleventh hour letter specified the rate of interest at which banks would be able to offer loans and other conditions and criteria to differentiate the BBLS from its bigger siblings: CBILS (coronavirus business interruption scheme) and CLBILS (coronavirus large business interruption scheme).

In his note, the Chancellor set the BBLS lending rate at 2.5% “to ensure that these loans are affordable and accessible”. The letter also exempted the loans from inflexible consumer protection laws to simplify the application process and speed the vital funds to small businesses as quickly as possible.

The Chancellor confirmed the following details conditions:

  • The loan will be 100% guaranteed by the government
  • Length of the term will be six years
  • The first 12 months interest will be paid by the government with 12 months of payment deferred.
  • Loans will be between £2,000 and £50,000, capped at 25% of turnover
  • The Bank of England will offer term funding scheme with “additional incentives for SMEs to extend the term of some of the funding they access via the TFSME to align with the 6-year term of loans made through BBLS” 
  • Banks subject to the UK Leverage Ratio will be able to exclude loans under BBLS from the leverage ratio exposure measure.

A BBLS application link was added to the business support page this morning redirecting visitors to the official British Business Bank application page. Accountants who have submitted applications today confirmed being asked to provide turnover figures or estimates for the year to 31 December 2019.

Interaction between BBLS and CBILS

To differentiate the Bounce Back Loans from CBILS, the Chancellor adjusted the minimum size of CBILS loans and overdrafts to £50,001 “to avoid any risk of confusion or overlap”. Those with CBILS loans or overdrafts of £50,000 or less will be able to switch their CBILS facility to a BBLS loan “should they choose to do so over the next few months”.

However, “This change to the minimum facility size will not apply to asset finance and invoice finance CBILS facilities,” the chancellor wrote.

Money already on the way

In a matter of hours, banks and accountants were confirming that significant numbers of applications had been submitted and accepted.

By 10 am this morning, Lloyds Banks confirmed it had processed 5,000 Bounce Back Loan applications with an average loan size of £35,000; in contrast its average CBILS average loan size had been £250,000.

By 2 pm, Barclays said it had approved 6,000 Bounce Back Loans totalling £200m.

After some initial false starts on the website, Jonathan Ratcliffe from commented: “Once we started the process with Santander (our bank) things were very simple. The only research I needed to do was work out our turnover in the last financial year and input around 5 pieces of information such as company number, address, turnover, bank sort/account details and of course how much we needed to borrow. It was very easy indeed.”

Soaring Falcon CEO Alex Falcon Huerta reported to AccountingWEB that she had received her first loan funds within seven hours of applying. Find out how she did it in her article, Bounce Back Loans: The fastest way to SME cash.

Replies (6)

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
06th May 2020 09:33

We've been discussing the bounce back loan scheme in this morning's Q&A webinar with Rebecca Benneyworth and Julie Palmer from Begbies Traynor.

Several people in the chat report getting the loans through quite quickly, but apart from Lloyds and Santander, other banks have struggled with volume and getting money into business accounts, according to Kirsty McGregor from the Corporate Finance Network.

Darrly Ashing said Barclays was pretty quick with one client, but half a dozen others had their applications rejected because they had more than one signatory. Catch up with the conversation here (about 20mins in):

Thanks (1)
By jvenegas16
06th May 2020 10:11

It would be interesting to know out of the number of loans approved, how many applications were made, as the statement indicates that no all applications are approved.

Thanks (0)
By North East Accountant
06th May 2020 11:06

Is there an end date when this scheme will stop?

Or a case of apply now while stocks last?

Thanks (0)
Replying to North East Accountant:
By jvenegas16
06th May 2020 11:15

The Bounce Bank Loan Scheme will initially be available for six months from 4 May 2020 to 4 November 2020.

Thanks (0)
Replying to jvenegas16:
By North East Accountant
06th May 2020 12:28

jvenegas16 wrote:

The Bounce Bank Loan Scheme will initially be available for six months from 4 May 2020 to 4 November 2020.

Thanks, that's very handy to know.
Thanks (0)
By Fati
29th Jun 2020 02:52

i have applied for bbls 1 week ago with lloyds and after sometime i have recieved a reply email "bbls faciltiy letter",can i plz know what does that mean and whats next ,is it approval to my applicatioin??

thanks in advance

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