Over the last audited Quarter of the Bounce Back Loan Scheme, 12,919 Bounce Back Loans with a total value of £448.76 million are in a position whereby they have no Goverment Guarantee attached.
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 (BBB), 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 31 December 2024, the government guarantee has been removed from 13,552 loans to a total value of £1.11 billion with the following breakdown for each scheme:
- BBLS – the government guarantee has been removed from 12,919 loans to a total value of £448.76 million
- CBILS – the government guarantee has been removed from 619 loans to a total value of £155.34 million
- CLBILS – the government guarantee has been removed from 14 loans to a total value of £504.72 million
As at 31 December 2024, the government guarantee has been removed for the following reasons:
- lender discussion – the government guarantee has been removed from 6,466 loans to a total value of £687.62 million
- data entry error – the government guarantee has been removed from 7,086 loans to a total value of £421.20 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 BBB and scheme governance requirements.
It is important to note that the number and value of loans removed from guarantee represents the gross figure, before any data corrections have been made and re-entered on the scheme portal. As such this does not equate to the value of the reduction in taxpayer liability. The nature in which the removals data is entered onto the scheme portal is such that it is not possible to identify the net figure.
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.
