Well, it looks like the banks have finally got their own way and are rubbing their hands in glee at the soon to be launched Recovery Loan Scheme.
Plenty of them have signed up to that scheme and are eager to see it launched, for with Rishi having seemingly been badgered by bank bosses and the powers that be (some powers) at the British Business Bank, they are going to be able to set their own interest rates on those loans.
With just 80% of the loan guaranteed by HM Government, that does of course mean there are risks involved in that scheme for lenders, so you can 100% guarantee they are going to cherry pick the businesses they lend out to.
However, with there being so many lenders that are eager to get involved in that scheme there will be some of them that may be prepared to take a risk on businesses other lenders do not want to touch with a bargepole, but you can bet your bottom Dollar they are going to make those business owners pay through the nose for those loans with some sky high interest rates.
The Recovery Loan Scheme is basically a rehashed version of the CBILs loan scheme and as such you only have to compare the number of CBILs that have been approved, that being some 92,449 of them to date with the number of Bounce Back Loans, that being 1,500,466 of them, to realise they will be hard to come by for many business owners.
The CEO of the British Business Bank, that being Catherine Lewis La Torre is allegedly giddy with excitement at the launch of that new scheme, for she and her team have ensured it is favourable to the banks and not small business owners.
That is a sad state of affairs really, for how on God’s Green Earth can you offer a “Recovery Loan” if many businesses desperate to recover cannot access that scheme due to the increased checks, including credit checks demanded by their accredited lenders.
The rules apparently state that “Lenders will be required to undertake credit and fraud checks for all applicants. When making their assessment, lenders may overlook concerns over short-to-medium term performance owing to the pandemic. The checks and approach may vary between lenders.”
Can you honestly see lenders being sympathetic to once viable businesses that have experienced a huge downturn in their income/profits during the pandemic and those whose credit ratings have taken a knock over the last year?
Until the Recovery Loan Scheme launches, it is like a failed drag queen stalking the backstreets looking for some trade. You cannot polish a turd.
I do so hope I am wrong, and as usual; I will show my arse on the Town Hall steps if I am.