Today is the day when apparently banks that are part of the Bounce Back Loan scheme are going to have their “digital journeys” for making use of the Chancellors “Pay as You Grow” aspect of the BBL scheme live.
Digital Journey simply means you will be able to take one of the PAYG options online or via a banks app instead of trying to get through to a banks support team member on the phone or in-branch, which as you all know is practically impossible these days.
Whether they will or not remains to be seen, but those who have got one or more Bounce Back Loans will at some point be able to extend the term of their loans from 6 years to 10 years and will also be able to take advantage of the 3 x 6 month interest only options.
If and when you have made at least 6 full monthly repayments, you will also be able to make use of one six month repayment holiday too.
I have asked the British Business Bank will HM Treasury by making payments for the loan principal when someone takes one or more of the 6 month interest only options, alas as usual they have not replied, so at some point in time when the banks do announce they are offering the PAYG options we may find out the answer to that all important question.
Below is another video in my series of Bank Bosses say the Craziest things. This one however is based on one question I know some of you have been worried about, that being, if you default on your Bounce Back Loan repayments and the bank you got it from chases you for repayment, then gives up doing so and claims the Government Guarantee, will HM Treasury then chase you in one way or another for the outstanding amount.
As you will see from the reply to that question in the video below, it is the banks job to chase you for repayment, as that is the organisation you have the loan with as it is the bank not the Government that you made the agreement with.
Important: The Bounce Back Loan scheme was launched in a hurry, everyone admits that, the aim was to ensure businesses, and much more so those who could not in the normal way access lending facilities rapidly, could survive and access emergency funds, which at the time of the launch of the scheme was thought to be a short period of time to help them get through this Pandemic and public health emergency.
As the British Business Bank who set the rules of the scheme for the Government, the banks and obviously the Government have been battling each other on how to handle defaults and the cloak of secrecy they have covered that aspect of the scheme since it launched in, it is their problem.
Not one single SME should be harassed for non-payment if they have been forced to take out a BBL to survive if they cannot repay it, the debt should be written off and they should, in my humble opinion be allowed to continue trading too, you cannot bounce back if your credit file or that of the business is knocked by a default.
The perfect solution would be to turn BBL’s into a tax free grant. As it stands the only organisations that are 100% going to benefit from the scheme are the banks.
Anyway, back to the video, the person answering the question by the way is Katherine Braddick, Director General, Financial Services, HM Treasury.