Co-op and Starling to start offering up to £50,000 bounce back loans to small business customers
THREE new lenders have been approved for the government’s bounce back loan scheme, which is aimed at helping small businesses get back on their feet.
The Co-operative Bank, Starling Bank and Allied Irish Bank are the latest institutions to be able to offer the loans, joining 11 other banks which have already been approved.
Under the new scheme, which launched on May 4 and is available until November 4, firms can get loans worth up to 25 per cent of their turnover, up to a maximum of £50,000.
They're 100 per cent guaranteed by the government, and the government will cover the interest on the loans for the first 12 months, with firms able to pay back the remaining balance over the next five years at a 2.5 per cent interest rate.
Co-op said it had begun offering the loans from this morning, although Starling and Allied Irish had not yet confirmed when they would begin taking applications.
The news is likely to be welcomed by small business owners, some of whom have struggled to access the money in recent days.
Small businesses are currently only able to access the loans through banks where they have an existing business account.
'Securing a short-term bounce back loan will be crucial'
RAFAEL Rozenson, pictured, launched his business, at the beginning of 2018.
His is stocked in a number of gyms - but all of these are now closed.
Speaking before today's announcement the 40-year-old businessman, who is a Starling customer, told The Sun he felt the government had left gaps in providing help which meant some businesses were missing out.
Until today, he couldn't qualify for bounce back loans as Starling hadn't joined the scheme and most lenders are only offering the support to their own customers to begin with.
He adds that he doesn't qualify for furlough as he's the director of a limited company, and he can't furlough himself as he still needs to work on the business. He doesn't employ any other staff.
"I am concerned about the future, as the majority of our customers have stopped trading and most of our major plans for 2020 have been cancelled," he explained.
"We aren’t eligible for the government's Coronavirus Business Interruption Loan Scheme (CBILS) either because like a lot of start-up businesses in our industry, we are still loss-making.
"That means we don't meet the financial criteria.
"We can defer payment of our VAT and this will be helpful although it is not massive amount - but there is not much else we qualify for.
"I was really excited when the bounce back programme launched as we are looking for a small loan to tide us over during the crisis.
"The next few months are really all about survival and securing the short-term bounce back loan will be crucial."
That means that the more banks that are added to the scheme, the more firms will be able to apply for a loan, although the government does want banks to start offering loans to non-customers too.
Starling Bank has around 100,000 business customers, while Allied Irish has 294,000 customers across its business, retail and corporate clients.
Co-op, meanwhile, has more than 85,000 small business customers.
Banks which currently offer bounce back loans
These banks have been approved by the government to offer coronavirus loans to small businesses.
- Allied Irish
- Bank of Scotland
- Barclays
- Clydesdale Bank & Yorkshire Bank
- Co-operative Bank
- Danske Bank
- HSBC
- Lloyds Bank
- NatWest
- Santander
- Starling
- TSB
- RBS
- Ulster Bank
Keith Morgan, chief executive of British Business Bank, which approves lenders to offer the loans, said: “There has been incredible demand from smaller businesses for bounce back loans since the scheme launched this week.
“Onboarding lenders with the capability and means to deliver the scheme rapidly means that more UK smaller businesses will be able to access the finance they need to get through the current pandemic.”
Businesses which want to apply for a loan have to have been trading since March 1, and have to prove that they have been adversely affected by the coronavirus crisis.
You’re not allowed to be using another government-backed coronavirus scheme, or be in liquidation or bankruptcy.
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When the bounce back loan scheme launched last week, the website crashed as 30,000 businesses applied for a loans in just 30 minutes.
Martin Lewis explains how self-employed and company directors can apply for bounce-back loan help.
Banks have previously been ordered to speed up lending to small businesses hit by financial trouble in recent weeks.