Starling Bank gears up to offer loans under Bounce Back Loans scheme

By John Reynolds on Wednesday 29 April 2020

Alternative Lending

While OakNorth and ThinCats won't participate, due to the funding sizes being offered.

Starling Bank gears up to offer loans under Bounce Back Loans scheme
Image source: Anne Boden/Starling Bank

Starling Bank is planning to offer loans under the government's new Bounce Back Loans scheme, but the £50,000 loan ceiling means OakNorth and ThinCats will not be participating in the lending scheme, despite being accredited.

The government on Monday announced that small and medium-sized businesses impacted by Covid-19 can potentially access loans worth up to £50,000 backed with a 100 per cent government guarantee.

Called the Bounce Bank Loans scheme, it was launched following complaints that companies were having difficulty getting credit under another government aid programme, the Coronavirus Business Interruption Loan Scheme (CBILS), designed to help firms survive the Covid-19 shutdown.

Read more: Fintech industry gives cautious welcome to government’s new micro loan scheme

The firms which can lend through the new scheme are those accredited by the British Business Bank to lend through the CBILS, which, unlike the Bounce Back Loans scheme, has an 80 per cent state guarantee on loans.

These include several alternative lenders: Starling Bank, Funding Circle, OakNorth, Paragon Bank and ThinCats.

The accredited lenders have to decide if they want to lend through the Bounce Back Loans scheme.

A Treasury spokesperson said accredited lenders could start taking applications from Monday 4 May.

Starling Bank told AltFi it is “hoping to go live" through the Bounce Bank Loans scheme as soon as it can.

Alternative lender ThinCats told AltFi it would not be participating in the scheme as the scheme has a ceiling of £50,000 and ThinCats specialises in loans from £1m to £15m.

Likewise, OakNorth said it would not be lending through the new scheme as the minimum it lends is £500,000.

Paragon Bank was unavailable for comment but, according to its website, it typically lends above the £50,000 ceiling.

Funding Circle, which provides loans starting out at £10,000, was also unavailable for comment.

One concern expressed by some has been stamping out potential fraudulent activity by companies wanting to access funds.

A source close to the Treasury said they working "very hard" to combat such activity.

As well as the Bounce Back Loans scheme, changes have been made to the CBILS amid reports that banks were being slow and reluctant to lend to small and medium-sized businesses.

Lenders now only have to assess whether businesses were viable before Covid-19, and not their viability post-coronavirus.

Alternative lenders Iwoca and Tide are understood to be waiting to hear if they will be accredited on the CBILS scheme.

Sign up to the Daily Disruptor Newsletter