Businesses risk going bust due to bounce back loan restrictions

Tens of thousands of businesses could go bust due to blockages when accessing the bounce back loans scheme, MPs have warned.

The emergency coronavirus package has proved a popular route for more than one million businesses but the All Party Parliamentary Group (APPG) on Fair Business Banking has warned they are becoming harder to access.

The committee said accredited alternative lenders have been unable to meet demand as they can’t access the Bank of England’s Term Funding Scheme, while mainstream banks are focusing on new customers or deterring applications.

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The National Association of Commercial Finance Brokers (NACFB) said it has contacted its members to assess the extent of the issue.

“Although more than 1.1 million loans have been provided through the scheme, those businesses who have been encouraged to move to other fintech firms and ‘non-bank lenders’ cannot now access loans as their finance providers do not have access to the Bank of England’s Term Funding Scheme,” the NACFB said.

“Results from the survey carried out by the APPG reveal that 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.”

Funding Circle was accredited to provide bounce back loans last week but is yet to start lending through the scheme.