Over the last audited Quarter of the Bounce Back Loan Scheme, an additional 846 BBLs have had the guarantee yanked from them with a value of £65,830,000.00.
That now means, that the total number of BBLs with no guarantee attached is now 12,659 loans with a total value of £441,750,000.
It is often due to Lender error when processing those Bounce Back Loans that sees them either requesting their guarantees are given up, or it is uncovered at audit.
As for what Lenders can do with those Guarantee-Less Bounce Back Loans, well, some of them write it off as a lesson learned as the last thing they want is Rachel Reeves’ Covid Corruption Commissioner chasing them, and some will try and chance their arm and get law firms hound borrowers to repay them.
HSBC for example, who seemingly hold a large chunk of those dodgy BBLs are getting a firm called Restons to go hounding their customers, that firm charges Lenders wishing to use their service £150 plus VAT!
Much more on that, and the letters they send out here > https://mrbounceback.com/law-firm-restons-touting-for-trade/
Government Response/Explanation
Guarantee removals most frequently occur when lenders, either through their own processes or in discussion with British Business Bank, identify issues within their portfolio of scheme facilities. Issues can include matters such as data entry errors or where the lender wishes to voluntarily remove the facility from guarantee cover for other reasons. Where specific facilities are identified, each facility is reviewed and, where that facility has been settled, the payment claim that has been paid by the guarantor (together with the relevant Business Interruption Payment and/or Scheme Lender Fee where appropriate) is refunded by the lender accordingly.
As at 30 June 2024, the government guarantee has been removed from 13,288 loans to a total value of £1.10 billion with the following breakdown for each scheme:
- BBLS – the government guarantee has been removed from 12,659 loans to a total value of £441.75 million
- CBILS – the government guarantee has been removed from 615 loans to a total value of £155.03 million
- CLBILS – the government guarantee has been removed from 14 loans to a total value of £504.72 million
As at 30 June 2024, the government guarantee has been removed for the following reasons:
- Lender discussion – the government guarantee has been removed from 6,228 loans to a total value of £680.96 million
- Data entry error – the government guarantee has been removed from 7,060 loans to a total value of £420.53 million
Guarantee removal values and volumes can and do fluctuate; guarantees can be retrospectively removed or added at any given time. All amendments are processed in accordance with British Business Bank and scheme governance requirements.
Guarantee removals – lender discussion
Guarantee removals in this category can be attributed to ongoing discussion between British Business Bank and lenders. The rationale for guarantee removal includes (a) failure to comply with the terms of the Guarantee Agreement; or (b) voluntary removal by a lender (for example, following negotiations with British Business Bank or due to a lender’s internal processes).
While the lender is still required to abide by the agreement with the borrower and adhere to all regulatory requirements, the guarantee removal results in no further liability to the taxpayer for the original guaranteed portion of the facility.
Guarantee removals – data entry error
Lenders continuously upload data into the British Business Bank Scheme Portal. On occasion data errors occur. Guarantee removals in this category occur when a lender (a) has mistakenly uploaded the same facility more than once into the British Business Bank Scheme Portal; or (b) has mistakenly entered incorrect facility details that cannot be easily rectified in the Scheme Portal due to strict data checks and controls. Once identified, the duplicated or incorrect data is removed from the Scheme Portal. If necessary, corrected data is then re-entered onto the Scheme Portal. Only the value of the original or the correct facility remains guaranteed.
