Starling Bank set to join Barclays and Lloyds as an accredited lender under Bounce Back Loan scheme

By John Reynolds on Monday 4 May 2020

Alternative LendingDigital Banking

Applications for loans of between £2,000 and £50,000 opens today.

Starling Bank  set to join Barclays and Lloyds as an accredited lender under Bounce Back Loan scheme
Image source: Anne Boden/Starling Bank.

Highstreet banks Barclays, Lloyds and NatWest are among the first eight accredited lenders confirmed to offer loans under the government's Bounce Back Loan scheme but at least one fintech is expected to join the list, as applications open today.

The government scheme is designed to help small businesses impacted by the coronavirus crisis and 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.

Barclays, Lloyds, NatWest, Santander, RBS, Ulster Bank, Danske Bank and Clydesdale & Yorkshire Bank have been named as the first eight accredited lenders, according to the British Business Bank.

Starling Bank is expected to join the list of accredited lenders in the coming days.

Last week, Starling said: "The government has said that they will provide full details of the scheme on Monday 4 May. As an accredited CBILS lender, Starling is going to be offering loans under the Bounce Back scheme."

"We’ll be publishing more details and a way to register for this scheme soon. Starling Bounce Back loans will be available as soon as possible after 4 May."

Funding Circle, which is also accredited under CBILS, is also hoping to join the Bounce Back Loan scheme, it is understood.

However, other alternative lenders accredited under CBILS, like OakNorth, ThinCats and Paragon, are not expected to take part in the Bounce Bank 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.

It is understood the process for accreditation for the Bounce Back Loan scheme started with the big banks, with smaller and alternative lenders following later.

The scheme, which offers loans between £2,000 and £50,000, is 100 per cent guaranteed by the government.

The loan is interest-free for the first year, with rates of 2.5 per cent a year after the first 12 months.

Access to the loans, available through the accredited lenders, are open from 9am today, and government ministers hope the system will be easy and quick to use with a simple seven-question application form.

The CBILS scheme, which provides loans of up to £5m for companies with a turnover of less than £45m, has come in for criticism by some businesses, particularly smaller ones, regarding difficulty getting loans.

Last week, the number of loans agreed under CBILS was 8,638, down from more than 9,000 the previous week.

Max Chuard, CEO, Temenos, the banking software company, believes those banks with the most fleet of foot technology will be able to provide the most efficient service.

“The launch of the Government’s ‘bounce back’ loan scheme couldn’t come soon enough for small businesses whose livelihoods are being crippled by the COVID-19 pandemic," he said.

"Unlike its sister scheme, CBILS, the new programme promises to fast-track finance for businesses in need and give access to cash ‘within days’. However, its effectiveness will depend heavily on whether UK banks are equipped with the right technology to be able to cope with this unprecedented and increasing demand for fast finance."

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