Originally written by Timothy Adler on Small Business
B-North, the Manchester-based small business lender, plans to lend over £1bn to small businesses within its first four years.
The lender, which hopes to secure a provisional banking licence within weeks, will rebrand as Bank North once the licence comes through.
Initially, B-North aims to lend about £50m as its systems are tested under the scrutiny of the banking regulator.
Filling the gap
B-North sees itself as filling the gap for small business lending as the Big Four banks – Barclays, HSBC, Lloyds, NatWest – have centralised lending decisions, concentrating on large firms, making it difficult for them to get into the intricacies of each small business.
At first, B-North will offer secured loans of between £500,000 and £5 million.
The service plans to start in Manchester but eventually it expects to have eight regional “lending pods”, each effectively a small bank on its own.
Its founders include Jonathan Thompson, a former Santander banker who will be its chief executive, and chairman Ron Emerson, who was founding chairman of the British Business Bank.
B-North says that it will offer the fast, technology-driven credit decisions of a fintech — it claims that it will be up to 10 times faster than a
Tag Archive for Small-business Banking
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Treasury pushes to double bounce back loan repayment period to 10 years
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Treasury is pushing for the bounce back loan repayment period to be doubled from five years to 10 years.
Both Government and banks that have jointly lent £33bn through the bounce back scheme are afraid of the looming wave of nonrepayment.
More than a million small companies have borrowed under the bounce back scheme, which offers loans of up to £50,000 and are covered by a 100-per-cent state guarantee.
The loans were launched in May after an outcry about the criteria attached to the coronavirus business interruption loans, which made it difficult for small businesses to qualify.
However, the Office for Budget Responsibility estimates that £53bn will eventually be handed to small firms in bounce back loans, with 40 per cent likely to default. This equates to costing the taxpayer £16bn in bad loans.
>See also: Half of small businesses will never repay Bounce Back Loans, warn banks
Bounce back loan repayment
Nearly half of small businesses that have taken out government emergency coronavirus loans do not intend to repay them. Forty-three per cent of businesses that have taken out either bounce back loans or coronavirus business interruption loans said they do not believe the Government will chase the
Hot Business News Today
Treasury pushes to double bounce back loan repayment period to 10 years
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Treasury is pushing for the bounce back loan repayment period to be doubled from five years to 10 years.
Both Government and banks that have jointly lent £33bn through the bounce back scheme are afraid of the looming wave of nonrepayment.
More than a million small companies have borrowed under the bounce back scheme, which offers loans of up to £50,000 and are covered by a 100-per-cent state guarantee.
The loans were launched in May after an outcry about the criteria attached to the coronavirus business interruption loans, which made it difficult for small businesses to qualify.
However, the Office for Budget Responsibility estimates that £53bn will eventually be handed to small firms in bounce back loans, with 40 per cent likely to default. This equates to costing the taxpayer £16bn in bad loans.
>See also: Half of small businesses will never repay Bounce Back Loans, warn banks
Bounce back loan repayment
Nearly half of small businesses that have taken out government emergency coronavirus loans do not intend to repay them. Forty-three per cent of businesses that have taken out either bounce back loans or coronavirus business interruption loans said they do not believe the Government will chase the
Hot Business News Today
Half of small businesses will never repay Bounce Back Loans, warn banks
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Banks are warning that small businesses will never repay up to half of the Bounce Back Loans that have been taken out.
Moreover, when this happens, the Chancellor should prepare for the collapse of hundreds of thousands of small businesses.
Three senior bankers have warned that between 40 per cent and 50 per cent of the 608,000 borrowers who have taken out £18.5bn of Bounce Back Loans could eventually default on the debt.
Although the Government has said it will guarantee 100 per cent of the loans up to £50,000, it is still down to banks to pursue defaulters for the debt.
Executives say it would be logistically impossible to take hundreds and thousands of small, often family-run businesses to court, and that it would be a PR disaster for high street banks.
“Some arrangements will have to be made. A lot of them will be written off or converted into something else,” one bank chairman told the Financial Times. “In most cases the idea of the government taking equity in these companies is unrealistic — they are simply too small. So the question is what’s going to happen to all of these loans?”
RBS calls for bad loan
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State could take equity in small businesses, suggests Lloyds chairman
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Lord Blackwell, chairman of Lloyds Banking Group, has suggested the government could end up owning equity in thousands of small businesses.
The Lloyds chairman thinks the government would be better off converting loans it is already guaranteeing into equity stakes in small businesses if loans go bad.
Banks and the government would need to work together to “think about how we transform some of that debt that they’ve accumulated into some other kind of security”, he said.
The Bounce Back Loans scheme, which launched on Monday, May 4, lent over £2bn to more than 69,000 small businesses within its first 24 hours.
The parallel Coronavirus Business Interruption Loan Scheme (CBILS) has lent £5.5bn to 33,812 businesses since its launch on March 23.
Lord Blackwell, 67, told an online seminar organised by City & Financial Global that debts could be converted into equity or an equity-type of security.
Viable businesses
Government and banks “do need to think about what will be required to recapitalise some of those businesses to ensure that they are viable going forward and otherwise viable businesses aren’t forced into insolvency or liquidation”, he said.
Devising a solution “needs working through urgently so that we can give businesses some
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Fintechs giving up on joining coronavirus emergency loan scheme
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Fintechs are giving up on ever being recruited to join the government’s emergency coronavirus bailout scheme for small businesses, despite being eager to do so.
The British Business Bank, which administers the Coronavirus Business Interruption Scheme (CBILS), has added four more lenders to the scheme – Allied Irish Bank, ThinCats, Paragon Bank and IGF – to join 48 existing accredited lenders.
However, just three of those which have joined the coronavirus loan scheme – Funding Circle, OakNorth and Starling Bank – are the kind of fintechs which have shaken up business lending.
British Business Bank says that 80 per cent of Britain’s small business have a relationship with one of the CBILS 52 accredited lenders, and that it is speeding up onboarding of new lenders to further extend the scheme’s reach.
>See also: What is the British Business Bank? – a Growth Business guide
But, according to the Telegraph, 100 other lenders are champing at the bit to join the BBB’s accreditation process and some are losing hope.
This is despite 60 per cent of small businesses saying they will run out of cash within 12 weeks, according to the Association of Accounting Practitioners.
Oliver Prill, chief executive of fintech
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Microbusiness £50,000 Bounce Back Loans – how they work
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The government has launched its microbusiness Bounce Back Loans scheme with a higher than expected £50,000 limit and a 100 per cent guarantee.
Businesses will be able to borrow between £2,000 and £50,000 and access the cash within days
Loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form
The microbusiness Bounce Back Loans scheme is capped at 25 per cent of turnover and promises a streamlined application process.
Treasury says that the new microbusiness loan scheme will open next Monday, May 4 and will deliver cash to successful applicants within 24 hours.
Rishi Sunak, the chancellor, said: “Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.”
Mike Cherry, national chairman of the Federation of Small Businesses, said: “To date, the existing interruption loan scheme has not been working for the small firms that make-up 99% of our business community.
“The decision by the chancellor to listen to our recommendation for a 100 per cent guarantee on smaller loans, alongside the
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Most emergency coronavirus bank loan applications still being rejected
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
EXCLUSIVE: Most coronavirus emergency business loan applications are still being rejected, despite chancellor Rishi Sunak overhauling the scheme.
Fifty-three per cent of Coronavirus Business Interruption Loan Scheme (CBILS) loan applications have been rejected, according to a survey of Small Business readers – despite the Treasury loosening the scheme on April 3.
Previously, high-street banks were following government guidance that coronavirus emergency business loans should only be offered to small businesses which would not qualify for a commercial loan.
The paradox is that banks were being asked to lend to companies they would normally turn down – and still be on the hook for the 20 per cent of the CBIL the government has not guaranteed.
Banks have long been reluctant to lend to small businesses, with just 2 per cent of lending going to SMEs, as they do not have the security banks look for.
Small Business surveyed 1,823 small businesses, 53 per cent of which said their coronavirus loan application had been rejected since April 3, when the scheme was overhauled.
The SmallBusiness.co.uk survey chimes with business secretary Alok Sharma’s own admission on Sunday that only 4,200 loans worth £800m have been awarded, despite over 300,000 applications.
This is
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First two fintechs added to coronavirus emergency loan scheme
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The first two fintech banks have been added to the government’s coronavirus emergency business interruption loan scheme in an effort to break the logjam.
Other fintechs, including Funding Circle, Iwoca and Market Finance, which together have provided loans worth billions of pounds to small businesses, are also hoping to get approval to join the emergency loan scheme next week.
Only 2,500 loans worth £450m, have been agreed so far through the Coronavirus Business Interruption Loan Scheme (CBILS) out of a small business population of 5.9m.
Bankers say they have been overwhelmed with applications through the CBILS, with an estimated 300,000 enquiries.
Plus they complain that their loan book must be scrutinised by the British Business Bank, which itself is overwhelmed by the volume of loan applications.
>See also: 12 of the best digital banking platforms for small business
Yesterday, former Treasury secretary Baroness Morgan called for the CBILS to be opened up to fintechs, which, she said were more agile and more nimble than traditional lenders.
OakNorth Bank and Starling Bank have been added to the dozens of existing accredited lenders, alongside Cynergy Bank and The Co-Operative Bank.
Meanwhile, Arkle Finance, Close Brothers and Secure Trust Bank have also become accredited CBILS
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How is your bank helping your small business through coronavirus?
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Although all the high street banks are offering loans through the Coronavirus Business Interruption Loans Scheme (CBILS), several banks have gone further and are offering additional support to small business sector to help it survive the coronavirus crisis.
Here is a round-up of what small business help each high street bank is offering to help your SME survive the coronavirus pandemic.
Additional coronavirus bank support for small business – what’s available?
Barclays
Helpline for all business banking customers impacted by the coronavirus outbreak. Call 0800 197 10862 between 8am and 8pm Monday to Friday (except bank holidays)
Free business banking and no fees or interest on overdrafts between March 13 and June 12 2020 for business banking customers with annual turnover up to £250,000. After June 12 2020, normal charges and fees will apply, which will be debited from business banking accounts from August 2020
Clydesdale Bank and Yorkshire Bank
Clydesdale Bank and Yorkshire Bank relationship managers can approve a three-month capital repayment holiday to business customers who have not previously been identified as being in or approaching financial difficulty, or other high-risk groups
Relationship managers can authorise to extend overdraft and loan facilities by up to six months without charge