The UK’s biggest banks have confirmed that they have received hundreds of applications for the bounce-back loans that have been made available today. Barclays Bank said that they received 200 loan applications in just one minute.
The bounce-back loan went live this morning, and even since the early rush, there has been an application rate of an astonishing 35 per minute. The chief executive for Barclays UK, Matt Hammerstein, said that all of the initial 200 early applications have been quickly approved. He highlighted the fact that the application process was very quick and “super simple.” It is expected that those that have applied to the loan scheme today will have the money within 24 hours.
Lloyds bank have also announced a huge demand for the loans, saying that they have received roughly 2000 bounce-back loan requests within the first two hours of being open today. “We do expect a really quite significant volume flowing through to the bounce back loans,” said chief exec of Lloyds commercial banking, David Oldfield.
The bounce-back loan scheme was announced last week by the Chancellor, Rishi Sunak. Now, business owners struggling to stay afloat during the lockdown only have to fill out a short application form that requests their annual turnover, the borrowing amount, and a few business details. Loans can be granted quickly, as long as the applicant is not claiming for more than 25% of their annual turnover. There is also a £50,000 upper limit and a £2000 minimum. These loans are different from simply taking out a loan from a bank. They have been guaranteed by the Treasury, which means that there is no risk to the banks themselves. The government will then pay 12 months’ interest, with an overall interest rate of 2.5%.
This has reduced the pressure on business owners and slashed the time it takes for loans to be approved. Sunak said that the loans should be quick to process because banks will not have to do “forward-looking viability checks.”
Hammerstein doesn’t expect the applications to slow down anytime soon, saying, “I think there will be extraordinary demand, among smaller businesses in particular.”
The government has been recently criticised for the slow pace of delivery of the bounce-back loan scheme. Despite a treasury-commissioned report in early April, it is only today that the scheme went live. That’s because the Treasury has been looking at ways to fund the small business loans. The National Lottery and UK gambling sectors were also considered as alternative options for funding.
The estimated figure is that around 400,000 people in the country will be eligible for the bounce-back loan, but with a quarter of all UK businesses forced to close during the lockdown, that may not be enough to give the economy the boost that it needs. How this affects the thousands of workers who are now out of work is yet to be seen, but forecasts suggest that the country now faces the deepest recession since the 1920s.