Lenders Manual for the Bounce Back Loan Scheme

January 9, 2021 Bounce Back Loan News Archive, Daily Update, Todays News

Below is the Lenders Manual for the Bounce Back Loan Scheme I have been sent by the British Business Bank. Be aware it has been redacted and as such you will find certain sections have been deemed to be “top secret” and not for the eyes of most mere mortals like you and I, hence the unusual gaps you will find below.

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Table of Figures…………………………………………. 4

Preface…………………………………………………… 5

Legal Disclaimer………………………………………… 5

Lender Queries and Feedback…………………………. 6

1.0 Introduction and Overview of BBLS……………… 7

2.9 Key Activities and Decisions for Lenders……….. 21

5.0 Business Interruption Payment (BIP)…………… 32

9.0 General Information for BBLS Lenders…………………………………………………………… 53

  • BBLS Portfolio Monitoring…………………………………………….. 53
  • Additional BBLS information…………………………………………….. 54
  • The BBLS Audit Programme……………………………………………… 58
  • Introduction…………………………………………… 58
  • Audit process…………………………………………… 58
  • Audit Conclusions…………………………………………… 59
  • Thematic Audits…………………………………………… 59

11.0 List of Annexes…………………………………………………………… 60

Annex 1 – Ineligible and Restricted Sector List…………………………………………………………… 61

Annex 2 – Features to be conveyed to BBLS Borrowers by Customer-Facing Staff                                                                                                    62

Annex 3 – Standard Question Set and Declarations…………………………………………………………………………. 63

Annex 4 – State Aid Form…………………………………………………………………………. 72

Annex 5 – Business in Difficulty Questionnaire…………………………………………………………………………. 74

Annex 6 – Legal wording to be inserted into the BBLS-Supported Facility Letter77 Annex 7 – Group Definition and Worked Examples……………………………………………………. 78

Annex 8 – Guide to Lenders on Information to keep in the Borrower File for Audit Purposes……………………………………………………. 88

Annex 9 – Key Information Guide for Demands & Recoveries Staff………………………………………………………………………… 89

Annex 11 – Reporting Requirements…………………………………………………………………………. 93

Annex 12 – Glossary of Definitions…………………………………………………………………………. 96

Preface

This Bounce Back Loan Scheme (the “BBL Scheme” or “BBLS” or “the Scheme”) Lender Manual provides operational guidance to support an accredited Lender in their BBLS administration. Primarily written for the BBLS Product Owner (the Lender’s primary point of contact with BBB in relation to the Scheme), it provides guidance and tools to assist in ensuring BBLS is appropriately embedded within their organisation. It outlines the fundamental principles of BBLS and then follows the typical lifecycle for a BBLS Facility.

The BBLS Legal Agreement has been developed to provide the legal framework and contractual terms and conditions of the Scheme.

Lender Guidance

BBLS has provided                                                                                                          , for example:

  • BBLS training materials for use by staff involved in both BBLS origination

which a BBLS Product Owner may find useful for managing BBLS within their existing operational processes. This guidance is non- mandatory and may be adapted by an accredited Lender to reflect how they use BBLS within their own organisation.

  • A Marketing Toolkit (linked in S2.9) for advice and guidance on marketing the Scheme.
  • Lender guidance on the submission of BIP and Guarantee
  • The BBLS Web Portal Manual which separately outlines the protocols and requirements for the reporting of loan

Further tools and guidance are available on the BBB website.

This Lender Manual and any additional tools and guidance materials issued to Lenders, should not be utilised in Lender marketing materials or shared with BBLS Applicants/Borrowers.

Legal Disclaimer

This Lender Manual is a Scheme Document as defined in the BBLS Legal Agreement between the Secretary of State for the Department for Business Energy and Industrial Strategy (“BEIS”) and the accredited Lender and is advisory in nature.

In the event of any inconsistency between the guidance within this Lender Manual and the terms and conditions within the BBLS Legal Agreement, the BBLS Legal Agreement takes precedence.

For ease of use, this Lender Manual at times uses differing terminology to that used within the corresponding BBLS Legal Agreement. Where terminology differs, a Glossary of Definitions (Annex 12) is provided at the end of this Manual to provide a read across to the corresponding definitions within the BBLS Legal Agreement. The Glossary also includes some definitions from the BBLS Legal Agreement, for ease of use. Terms not defined in this Lender Manual shall bear the meaning given in the BBLS Legal Agreement.

Lender Queries and Feedback

BBLS Product Owners within Lender organisations should be able to find answers to most types of BBLS operational queries within this Lender Manual or by reference to the BBB website dedicated page at:

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business- interruption-loan-schemes/bounce-back-loans/

In the first instance, BBLS-related queries from customer-facing and other internal staff should be directed to the Lender’s own BBLS Product Owner or in-house expert area.

When dealing with such queries, Product Owners are encouraged to refer to this Manual.

Feedback on potential improvements or amendments to BBLS design or processes will usually be sought during regular BBB/Lender monitoring meetings and via the independent audit process. Notwithstanding this, BBB welcomes feedback from Lenders on any aspect of BBLS design and/or operations at any time.

1.0 Introduction and Overview of BBLS

The BBL Scheme was established on 4th May 2020 with the aim of supporting the continued provision of finance to UK businesses during the Coronavirus (COVID-19) outbreak. BBLS was scheduled to run for an initial period of 6 months until 4th November 2020 (the expected “Scheme End Date”).

BBLS can be used to enable smaller businesses (SMEs and micro businesses) or other types of businesses which only require smaller loans, that have been adversely impacted by the Coronavirus (COVID-19) pandemic to access funding. In this way, BBLS supports the UK Government in increasing the supply of finance to small businesses which enables businesses to navigate the disruption caused by the Coronavirus (COVID-19) and in turn supports the UK economy.

There are a number of Lenders accredited by the British Business Bank to participate in BBLS1. BBLS is designed to be a guaranteed term loan Scheme. Accredited Lenders can use BBLS to facilitate new lending including the refinancing of existing debt.

2.0   The Key Principles

There are several parties to a BBLS supported transaction – a Borrower (the business entity), a Lender and the British Business Bank (“BBB”), acting as agent for the Secretary of State for BEIS, who is the Guarantor. The inter-relationship between the parties and the high-level operating model for BBLS is summarised in the diagram below. References to BBB in this Lender Manual are in its capacity as agent for the Secretary of State for BEIS.

1 A list of Lenders participating in BBLS is published on the BBB website:

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan- schemes/bounce-back-loans/current-accredited-lenders-and-partners/

Figure 1

The Bounce Back Loan Scheme enables the smallest businesses (SMEs and ‘micro’ businesses) or other types of businesses which only require smaller loans, that have been adversely impacted by the Coronavirus (COVID-19) epidemic to gain access to finance. The application process is designed to be fast, with Borrowers completing a simple online application form, which is then expeditiously processed by Lenders.

Accredited BBLS Lenders can offer BBLS loans to Borrowers who have confirmed key eligibility criteria to the Lender via the simple online application form.

The Scheme provides that a customer may apply for one loan for each separate business, unless the businesses are a group as defined by having a holding company.

A Borrower does not have the right to demand a BBLS Facility, even if they believe they meet all the applicable Eligibility Criteria. Where Scheme principles allow for Lender discretion, that decision is for the Lender alone to make.

  • Principle of Self Certification

The application follows principles of self-certification. Lenders are not obliged to verify the responses supplied by the Borrower. Businesses are required to self-declare, amongst other things, that:

  • The business is engaged in trading or commercial activity in the UK at the date of the application, was carrying on business on 1 March 2020 and has been adversely affected by coronavirus (COVID-19).
  • The business (and any wider group of which it is part) is not currently applying for and has not already received a Bounce Back Loan Scheme
  • The business (and any wider group of which it is part) has not yet obtained a loan through either the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, or the Covid Corporate Financing Facility, unless that loan will be refinanced in full by the Bounce Back Loan Scheme
  • The business is a UK company or limited liability partnership, or tax resident in the UK. For the avoidance of doubt, applications may be accepted from co-operative societies which are tax resident in the
  • The business is not a bank, building society, insurance company, public sector organisation, state-funded primary or secondary school, or an individual other than a sole trader or a partner acting on behalf of a
  • Whether or not the business was, on 31 December 2019, a “business in difficulty” and does not breach State aid restrictions under the Temporary Framework; and if it was a “business in difficulty” then it must confirm it does not breach de minimis State aid restrictions and will not be used to support export-related
  • At the time of submitting their loan application, they were not subject to a debt relief order or an individual voluntary arrangement, an undischarged bankrupt nor, if the Applicant is applying for the Proposed Scheme Facility as a partnership, in a voluntary arrangement with its creditors nor in liquidation, or (in Scotland) subject to a debt payment plan, trust Deed – whether protected or not – or an undischarged
  • More than 50% of the income of the business (together with that of any member of any group of which it is a part) is derived from its core trading activity. This confirmation is not required if the Borrower is a charity or a further education
  • They will use the loan only to provide economic benefit to the business, and not for personal purposes. They have understood the costs associated with repayment of the loan and that they are able and intend to complete timely repayments in
  • Key Loan Information

The loan term is fixed at 6 years at an interest rate of 2.5%. BBLS loans are unsecured facilities.

Personal guarantees cannot be used for BBLS loans.

Lenders must not decline applications on the basis of affordability or credit concerns. In some circumstances a Lender may be aware of credit information that is indicative of possible fraud concerns. When aware of such information a Lender should act accordingly and this will not be deemed as an action taken on the basis of credit decisioning.

A business can apply for a loan of an amount up to 25% of turnover in the calendar year 2019, up to a maximum loan of £50,000 and subject to a minimum loan value of

£2,000. If the business was established after 1 January 2019, it can apply the 25% to the estimated annual turnover from the date the business started. Lower limits apply in some sectors if the business was an undertaking in difficulty on 31 December 2019.

A BBLS loan allows early repayment at any time, without any early repayment fees being charged.

The initial drawdown must be made in a single instalment which must be scheduled to occur within 6 months of its Offer Date.

Borrowers will not have to begin principal repayments for the first 12 months of the BBLS loan.

As part of the Scheme, the government is offering a Business Interruption Payment which will cover interest payments for the first year of a Bounce Back Loan (see Section

5.0 below).

The Borrower will be required, in the application form, to accept a waiver of the usual consumer protections and remedies that apply to business lending, under the Financial Services and Markets Act 2000 and the Consumer Credit Act 1974. The Financial Conduct Authority (“FCA”) regulatory framework applicable for the initiation of the BBLS loan, principally CONC 5, also does not apply to the BBLS. Consumer rights regarding any Collection activity that may take place following the 12-month payment holiday continue to apply (principally CONC 7). A statement from the FCA can be found here: https://www.fca.org.uk/news/statements/uk-coronavirus-business-interruption-loan- scheme-cbils-and-new-bounce-back-loan-scheme-bbl and see also s12 of the Business and Planning Act, 2020.

See S7.0 Borrower Protection for more detail.

Lenders are allocated a maximum amount of lending they can originate over the duration of the Scheme.

The BBLS Guarantee is provided to the BBLS Lender. The Borrower benefits from the BBLS Guarantee, as it enables the Borrower to obtain access to finance that it may not otherwise have been available to it. The Borrower remains 100% liable for the debt. The BBLS Guarantee covers 100% of a Lender’s net (post-recovery) principal losses, should the Borrower subsequently default.

Day-to-day interaction with the Borrower, including application processes, BBLS Facility management and recoveries activity (if the Borrower subsequently defaults) is fully delegated to the Lender at the level of the individual transaction.

The Lender is not permitted to levy additional fees and charges other than interest and capital repayment directly relating to the loan principal.

BBLS is subject to certain restrictions arising from the Industrial Development Act 1982 (which provides the statutory basis for BBLS) and also other government policy decisions; for example, BBLS cannot be used to support deposit taking banks or building societies.

The BBL Scheme is run under the Temporary Framework for State aid measures to support the economy in the COVID-19 outbreak (the “Temporary Framework”) and, if the Borrower was an “undertaking in difficulty” on 31 December 2019, under the de minimis State aid framework. As such the BBL Scheme is designed to be compliant with the requirements and restrictions of the Temporary Framework and when applicable the de minimis Framework.

2.3 Fraud and KYC

The Lender should make and maintain appropriate anti-money laundering (AML) and know-your- customer (KYC) checks in relation to each Applicant and Borrower,

and in line with its legal and regulatory obligations and taking into account the Financial Conduct Authority’s “Statement on the UK Coronavirus Business Interruption Loan Scheme (CBILS) and the new Bounce Back Loan Scheme (BBL)” of 27 April 2020.

A Lender will not be at risk of losing the guarantee if they perform any extra activity to stop fraud. It is presumed that Lenders are                                                                                and while these differ across organisations where there is no additional information being asked of the Applicant and where they will identify fraud including fraudulent self- certifications The Scheme does not want to see these switched off. The only mandatory actions are the minimum standards but every fraud prevented is a good and desired outcome for the Scheme. When there is a fraud flag it is operationally a decision for the Lender to either decline outright or move to a manual review and this will be determined by the type of flag and the relative likelihood of false positives.

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3.0   Originating a BBLS Facility

  • Introduction

This section describes steps that a customer-facing member of staff may need to take to help process a BBLS Facility.

Accredited BBLS Lenders can offer BBLS to Borrowers who have confirmed key eligibility criteria to the Lender via a simple online application form. Applications will be made through Lender digital platforms hosting a common application form.

The application form must be used in full and with no amendments to wording, order or self-certification questions.

For convenience, the form is also included at Annex 3 and can be printed off for customer-facing staff to use.

Please refer to S2.0 Key Principles for eligibility and loan terms.

  • BBLS Application Form Standard Question Set and Declarations

A Lender must ensure that it has received the information and declarations required from the Borrower, including the data protection declaration, as incorporated by the Lender into its customer application process.

The application form must be used in full and with no amendments to wording, order or self-certification questions

For convenience, the form is also included at Annex 3 and can be printed off for customer-facing staff to use.

  • Explaining BBLS Features to the Borrower

The Lender has an obligation to ensure that staff involved in the delivery of BBLS are adequately trained and can explain key features of BBLS to Borrowers. As an aide- memoire the Lender Manual includes key features which the Lender should convey to potential BBLS Borrowers (Annex 2).

This includes:

Overview

  • BBLS is a UK government guarantee Scheme to assist small businesses SMEs adversely impacted by the Coronavirus (COVID-19) outbreak to access finance. The Lender’s ability to provide the small business with the BBLS loan facility is dependent upon the Lender receiving a guarantee from the UK Government under the BBLS. The UK Government provides the Lender with a full guarantee (100%), should the small business default on repaying the
  • The BBLS Guarantee is provided by the UK Government to the Lender and not the Borrower.

Liability

  • The provision of the BBLS Guarantee does NOT remove any of the Borrower’s liability for repaying the BBLS-Supported
  • In the event of the Borrower defaulting on BBLS Facility repayments (for example, failing to make specific repayments as and when they fall due), the Lender is entitled to seek to recover the full amount outstanding from the Borrower, subject to the requirements of the Scheme in relation to Recovery Standards, which are provided in the Lending agreement. A key information guide for Recoveries and Demand staff is included at Annex
  • Any monies received by the Lender under the Government Guarantee do not reduce the Borrower’s overall liability in any

Business Interruption Payment

  • The Borrower will also be entitled to a payment from the UK Government, which is known as the Business Interruption Payment, or “BIP”.
  • The BIP is a payment by the UK Government to cover the Borrower’s interest payments under the loan agreement under the BBL Scheme loan for a period of 12 months.
  • By agreeing to the BIP, the Borrower agrees that the UK Government may pay amounts directly to the Lender, in respect of the interest due, under the BBL Scheme loan when it is drawn down for a period of up to 12 months. The interest amount in relation to a BBLS loan is fixed at 5%.

If the Scheme Facility is granted under the European Commission’s Temporary Framework, the statement must state the State aid amount and the following language:

4.0   Originating a BBLS Facility: Offer and Drawdown of a BBLS Facility

  • Introduction

Section 4 provides further explanation on what a Lender needs to do when processing a BBLS facility.

BBLS is designed to achieve a rapid process (from approval to drawdown) within 24 hours for the majority of Applicants.

Following successful application, the Lender will issue the Borrower with a Facility Letter setting out the terms of the BBSL. As the Facility is being supported by BBLS, there are a number of BBLS related legal clauses, as set out in the BBLS Legal Agreement and Annex 6 in this document, which have to be included in the Lender/Borrower Facility Letter and which explain the BBLS terms to the Borrower.

Once the Borrower has accepted the terms of the Lender/Borrower Facility Letter and signed the BBLS specific documentation (in accordance with the Lender’s signing requirements for the Facility Letter), drawdown of the BBLS Facility can take place.

  • BBLS Process

Applicants are encouraged to approach their own bank account provider to expedite the BBLS loan process.

The application follows principles of self-certification.

Following receipt of correctly completed self-certification that the Scheme criteria have been satisfied, the Lender should follow the process outlined below.

For each Proposed Scheme Facility, the Lender must, as a minimum, undertake the fraud control processes set out In Schedule 8 of the Legal Agreement and S2.3 of this Manual, which while not mitigating all risk would give an appropriate level of comfort.

  1. If the Borrower holds a Business Bank Account with the Lender:

 

  • The application is subject to the fraud checks detailed above. It is accepted that an acceptable standard of due diligence to meet legislative and Regulatory requirements will have taken place at account opening stage and periodically through the lifetime of the
  • The Lender will already hold sufficient customer information to ascertain whether the Borrower meets the criteria that the business was established before 1 March 2020 in line with the Borrower’s self-certification.

 

  1. If the Borrower holds only a Personal Current Account with the Lender:

 

  • The BBL Scheme does not require that the Applicant must have a business relationship with the Lender in order to receive a loan. Within their standard policies and terms and conditions of business, some Lenders may not permit an existing customer to operate their business via a personal account. If a Lender identifies during their standard Know Your Customer (KYC) and fraud checks that their existing customer is operating a business via a personal account, the Lender may request that they convert to a business relationship in line with their standard policies. This is at the sole discretion of the
  • If the business was established on or before 5 April 2019 the Borrower will be instructed in the Application Form to provide a scanned copy of their 2018/19 self- assessment tax return (through a channel specified by the Lender) to evidence, in line with the Borrower’s self-certification, that the business was established before 1 March 2020. If a copy of the Borrower’s tax return cannot be supplied the Borrower will be treated as a customer new to the
  • The application is subject to the fraud checks detailed
  • Additional due diligence to a standard of that required to open a Business Bank Account to meet legislative and Regulatory requirements must be undertaken by the
  • The Facility can be maintained on the Lender’s commercial lending

 

  1. If the Borrower holds no banking relationship with the Lender or if the Borrower is a PCA only customer and unable to supply a scanned copy of their 2018/19 self- assessment tax return:
    • The BBL Scheme does not require that the Applicant must have a business relationship with the Lender in order to receive a loan. Borrowers approaching a Lender with whom they do not have any relationship may ask the Lender to explain how the loan will be paid to them before they
    • The application is subject to the fraud checks detailed
  • The application is subject to full customer due diligence to a standard of that required to open a Business Bank Account to meet legislative and Regulatory requirements. This will include a verification of the date the business was established.

 

  • Drawdown of a BBLS Facility

 

Once all the facility documentation has been signed (which may be electronic, if the Lender’s systems allow) and returned by the Borrower, the BBLS Facility may be drawn down.

The availability period allowed for drawdown of the BBLS Facility is 6 months and must be made in a single instalment.

BBLS is designed to provide funds to businesses within 24 hours for the majority of Applicants. Offer acceptance and drawdown may, in practice be a single customer interaction.

 

 

 

5.0 Business Interruption Payment (BIP)

Background

 

If the Lender offers a BBLS loan Facility to a Borrower, then the Borrower will be offered a Business Interruption Payment (“BIP”). The BIP acceptance is within the short Borrower application form.

The BIP is an offer by the UK Government to the Borrower to cover payments of the interest associated with the granting and maintenance of the BBLS loan Facility for a period of 12 months (the “BIP Period”) by making payments of BIP amounts directly to the Lender.

 

BIP Letter

 

In the case of BBLS, the BIP offer is made and accepted in the Application Form. The Lender agrees to provide to the Applicant under the Proposed Scheme Facility or the Borrower under a Scheme Facility (as applicable) a written statement setting out the aggregate amount of the BIP and the Scheme Facility (the “State aid Amount”). This may be incorporated into the Standard Scheme Application Process, the Scheme Facility Letter or provided as a separate statement which may be provided after the Initial Drawdown Date of the Scheme Facility, at the discretion of the Lender.

The Borrower Facility Letter should still clearly set out the interest owed by the Borrower during the initial 12 month period.

 

Application of the BIP

 

The BIP must be applied to pay interest from the Initial Drawdown of the BBLS loan Facility. The BIP will not cover any default interest or equivalent.

 

The BBLS Legal Agreement contains an acknowledgement from the Lender that it is paid the BIP for the benefit of the Borrower.

If the facility is granted under the European Commission’s Temporary Framework:

The amount of the facility plus the BIP is subject to a cap of EUR800,000 for undertakings in all sectors other than those in fishery and aquaculture sector where the limit is EUR120,000 per undertaking and in the primary production of agricultural products where the limit is EUR100,000 per undertaking. These caps apply per Borrower (or Borrower group) and are the maximum benefit a Borrower can receive.

The statement must state the State aid amount and include the following language:

 

 

 

 

If the facility is granted under de minimis State Aid rules the European Commission’s Temporary Framework:

 

The statement must state the State aid amount and the following language:

 

 

6.0   Managing a BBLS Facility once a Guarantee is in place

  • Early Repayment

 

Early repayment of a BBLS Facility is permissible in whole or in part at any time and the Lender is not allowed to make any charge for this.

 

  • Change of Legal Status

 

Borrowers occasionally have an existing BBLS Facility and then subsequently wish to change their legal status. Lenders should follow their normal commercial processes for a change of legal status of the Borrower. If the Lender would normally keep an existing Commercial Facility in place, then the BBLS Facility should also stay in place; if the Lender would normally withdraw a facility and seek its repayment, then this would be the route to follow for BBLS.

 

  • Repayment and Closing Facilities

 

Once a BBLS Facility has been repaid, it is “closed” and cannot be redrawn. Partial repayments of a BBLS Facility are permissible.

 

7.0   Borrower Protection

  • Background

 

BBLS is designed to provide finance quickly to businesses that have been adversely impacted by the Coronavirus (COVID-19) outbreak. In order to achieve this aim, Lenders are not required to perform any credit or affordability checks on Applicants or to assess whether an Applicant for the Scheme is vulnerable. In connection with this, a number of statutory protections have been disapplied. In addition, the unfair relationship provisions of the Consumer Credit Act 1974 (s140A) have been disapplied for credit agreements entered into under the Scheme (see s12 Business and Planning Act 2020). However, the BBLS Legal Agreement still requires Lenders to agree to certain obligations that are designed to provide protection to Borrowers.

 

  • Pre-contractual information

 

In line with the desire to make the Scheme as quick and efficient as possible from the perspective of the Borrower, it is envisaged that, wherever possible, requirements to provide information to Borrowers will be satisfied by Lenders including the required

 

information as part of the standard application process that is incorporated into their online journey for Borrowers.

The BBLS Legal Agreement requires Lenders to make available to each Applicant, the following minimum information clearly and prominently before the Applicant is bound by the terms of any loan:

  • the principal amount and interest rate of the loan;
  • the size and due date of each capital and/or capital and interest repayment instalment;
  • information on the right of the Applicant to repay the loan early;
  • brief information on the Lender’s complaints handling procedure and the right of the Borrower to escalate to the Financial Ombudsman Service, in accordance with any guidance issued by the Financial Ombudsman Service in respect of the Scheme;
  • the risks of non-repayment of the loan, including the impact on the Borrower’s credit file;
  • clear and prominent information on the key terms of the loan shown in the loan agreement.

The BBLS Legal Agreement does not prescribe a particular method of making this information available to an Applicant. It is generally expected that Lenders will do this as part of their online journeys, but it is open to the Lender to provide this information to the Applicant in a different way. The key requirement is that this information must be provided before the Applicant is bound by the terms of any loan.

 

  • Ongoing obligations to the Borrower

 

In addition to the pre-contractual information requirements described above, the Lender also has certain ongoing obligations in respect of the Borrower under the terms of the BBLS Legal Agreement. These include both ongoing information requirements and requirements governing other aspects of the Lender’s relationship with the Borrower.

 

  • Ongoing information obligations

 

The Lender must pay due regard to the Borrower’s information needs and provide information to the Borrower in a way which is clear, fair and not misleading. The BBLS Legal Agreement takes into account that Lenders will not make an assessment of an Applicant’s information needs at the time of origination of a loan.

In addition, the Lender must provide at least the following minimum information to the Borrower during the life of the loan:

  • timely, clear and adequate information that enables a Borrower to understand that, where the Borrower fails to make payments under the loan, the amount missed, what

 

can be done to remedy, in what timescales, and the impact (if any) on future repayments;

  • information about any proposed action by the Lender following a Borrower default, prior to the Lender taking such action;
  • regular information about the loan (on at least an annual basis) in the form of a statement setting out details of the payment transactions and amounts outstanding under the loan; and
  • information on options available to the Borrower for help and assistance, including sources of free independent

As these obligations form part of the BBLS Legal Agreement (as opposed to being part of the Lender’s regulatory obligations), the Lender must also explain to the Borrower what it has agreed to in the BBLS Legal Agreement in relation to information and other obligations to the Borrower.

In order to do this the Lender must include a statement on its website in a manner that is clear and prominent to an Applicant for a loan. This statement must set out that the Lender has agreed to the matters in the first paragraph of this Section 7.3.1, the matters set out in Section 7.3.2 (Other ongoing obligations) below, to the information requirements in paragraph 7.2 (Pre-contractual information) in respect of early repayment rights and the effect of default on the Borrower’s credit file and must draw the Borrower’s attention to its complaints procedures and right to escalate to the Financial Ombudsman Service.

 

  • Other ongoing obligations

 

In addition to the information requirements above, the Lender must also:

 

  • monitor the Borrower’s repayment record during the life of the loan and take appropriate action where there are signs of actual or possible repayment difficulties;
  • if a Lender, after the initial drawdown of a loan, identifies a Borrower as vulnerable (for example, due to mental incapacity) or has reason to believe that a Borrower may be vulnerable, make appropriate adjustments to ensure that the Borrower’s circumstances are accommodated throughout the duration of the loan;
  • upon a default, give the Borrower a reasonable period to remedy any breach and not treat the same as an event of default if it is remedied by the Borrower within this period; and
  • not charge the Borrower any Lender-levied fees of any description (including on default) or any default interest (the Lender may however continue to charge interest at 2.5% per annum if the loan is not repaid when due).

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9.0 General Information for BBLS Lenders

This section provides an overview of the key general provisions for the operation of BBLS, as set out in the BBLS Legal Agreement between an accredited Lender and BEIS.

  • BBLS Portfolio Monitoring

The below sets out the salient requirements for reporting at a high level, however is non-exhaustive. Please refer to the BBLS Web Portal Manual for further details on portfolio monitoring and data collation protocols

  • Reports

The Lender can generate other data reports in a format that can be saved and viewed in Excel, based upon the following criteria:

  • Scheme Facility Letter Date;
  • Facility State;
  • Facility Type;
  • BBLS

 

  • Regular Reporting

 

The Lender will:

 

  • report through the BBLS Web Portal, the information set out in Annex 11 (Reporting Requirements) in respect of each Scheme Facility by the end of the Business Day following (i) the offer a Proposed Scheme Facility to the relevant Borrower, (ii) the Initial Drawdown Date of the Scheme Facility, (iii) the making of a Formal Demand on the Borrower in respect of a Scheme Facility; and (iv) the date on which the Lender becomes aware of any change in such information; and
  • supply the HMT & BBB Reporting Data as set out in Annex

 

  • Additional BBLS information

 

  • Assignment of the overall rights under the BBLS Guarantee to a Third Party

Lenders need to seek prior written consent from BBB should they wish to assign, novate or otherwise transfer their overall rights and obligations under the BBL Scheme to any other party, including another group company.

 

  • Assignment of the BBLS Guarantee to a Third Party at the Individual Transaction Level

 

Lenders cannot assign or transfer the benefit of any individual BBLS Guarantee or any of its rights or obligations under the BBLS Legal Agreement, without prior written consent from BBB other than in connection with a liquidity scheme provided by the UK Government or any other state, supranational or public body (including, but not limited to, the Term Funding Scheme).

 

  • Other Government Schemes

 

For Lenders utilising capital from public sources, a maximum of 70% of the total proposed lending amount may come from sources under Government control3 and the balance (minimum 30%) must be sourced from institutional investors from within the private sector. The private sector can include the European Investment Bank and European Investment Fund.

Lenders may wish to check with their funding providers and/or legal advisors if they are unsure as to whether any funds are likely to constitute grant or grant-equivalent capital, or capital provided by BBB or its affiliates for the purposes of the BBLS Legal Agreement. Whilst some grant funding will not qualify for BBLS lending, Lenders may wish to review the terms of their funding agreements to establish whether and under what circumstances funds may no longer constitute grant funding.

Lenders should note that other direct grants, repayable advances, tax or payments advantages made under the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak will also count towards the thresholds for the BIP.

Where a Lender proposes to use capital provided by BBB or its affiliates (including Schemes which BBB administers on behalf of the Secretary of State for BEIS) alongside BBLS, prior written consent must be obtained from BBB.

 

  • BBLS and Community Investment Tax Relief (CITR)

 

Community Investment Tax Relief incentivises loans by investors to Responsible Finance Providers (RFPs), formerly known as Community Development Finance Institutions (CDFIs), who can then on-lend funding to their target groups. A statutory instrument, SI 2003/9, sets out the CITR rules.

 

3 ‘Under Government control’ is defined as capital sourced from UK central government, Devolved Administrations, Local Authorities, ERDF, ERDF legacy and other public sector legacy.

 

It will be up to the Lender to interpret the CITR regulations as to whether they can use CITR-backed funding for BBLS Facilities. Lenders may wish to check with their legal advisers if they are unsure.

 

  • Data Protection

 

Lenders and BBB have to comply with the requirements of applicable data protection legislation, including the Data Protection Act 2018 and the EU General Data Protection Regulation.

Data Subject Access requests may be submitted by a Borrower to BBB, and should be addressed to BBB by email to DataProtection@british-business-bank.co.uk.

The Lender and BBB must each ensure that they comply with applicable data protection law and regulation, including in respect of collecting and storing information appropriately and securely.

A data protection declaration will be provided by the Borrower as part of BBLS Application Form Standard Question Set and Declarations (Annex 3).

 

  • Cancellation of BBLS Guarantees

 

Individual BBLS Guarantees may be cancelled by BBB in the following circumstances:

  • By notice to the Lender if:

 

  • the Lender has acted fraudulently in participating in BBLS and making available BBLS Facilities

or

  • the BBLS Facilities do not comply with the Eligibility Criteria set out in the BBLS Legal

 

If a BBLS Guarantee is cancelled, the UK Government will not be obliged to make any payments to the Lender in respect of that Guarantee.

 

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