"We have encouraged the fintech sector and told SMEs to shop around for their finance needs, but some of those that have are now left out in the cold."
Although a million loans have been provided through the scheme, those businesses who have been encouraged to move to other fintech firms and ‘non-bank lenders’ now can’t access loans as their finance providers do not have access to the Term Funding Scheme (TFS), which the Bank of England uses to provide cheap money to lend to mainstream lenders and the lenders that can access the scheme are largely closed to new customers.
In a recent survey carried out by the APPG, all banks who offer Bounce Back Loans were either closed to new customers or had technical restrictions that made it difficult or impossible to access loans or long waiting lists to do so. Danske, Lloyds, RBS/NatWest, Santander and TSB were completely closed.
Of those who would consider new customers, Barclays, HSBC and Clydesdale were prioritising existing customers and Metro Bank require new applicants to attend a physical appointment.
The APPG on Fair Business Banking is calling on the Treasury, the FCA, mainstream banks and the Bank of England to eliminate the barriers that block non-bank lenders access to the TFS. The TFS is an expansionary monetary policy that provides mainstream banks with wholesale interest rates, which helps transmit the reduced interest rate into the real economy and thus supports growth.
Alternatively, the APPG says mainstream banks could provide non-bank lenders with funds from the TFS to ‘onlend’ to their customers or mainstream banks should open access to loans applications from new customers.
The Group says the exclusion of non-bank lenders, for example Tide, Capital on Tap, Funding Circle and iwoca, from this scheme leaves a significant portion of businesses from adequate finance, primarily consisting of sole traders and smaller limited companies and others who struggle to access mainstream financing. Tide alone have 80,000 business on their Bounce Back waiting list.
Kevin Hollinrake MP said: “The Government and mainstream banks have done a brilliant job of delivering one million Bounce Back Loans in record time, but it cannot be right that tens, maybe even hundreds of thousands of businesses are unable to access finance at this crucial time. Quite rightly, we have encouraged the fintech sector and told SMEs to shop around for their finance needs, but some of those that have are now left out in the cold. We need to address this situation, or we will see many thousands of businesses going to the wall unnecessarily.”
