The Calm Before the Storm Bounce Back Loan Defaults, Repayments and the Recovery Loan Scheme

Just a quick update, as you will all be more than aware the curtain is about to fall on the Bounce Back Loan scheme, then six days after it closes the Recovery Loan scheme will start.

As such, it is all quiet out there currently, as we not only await the finer details of that loan scheme to finally be announced, and why they haven’t announced them yet is a mystery, but knowing the way the British Business Bank operates they are probably arguing the toss with the lenders that have signed up to it.

However, those finer details will be forthcoming soon, but looking at what we already know about that scheme, it is sadly doubtful that as many people will qualify for one of those loans or will even want to take on more debt.

It is expected there will be a much bigger range of lenders that are taking part in the Recovery Loan Scheme that signed up for the Bounce Back Loan scheme, and with them appearing to have the power to pick an interest rate to charge within certain set boundaries, that does give me the impression those of you that will be declined with some of the big banks may get one of those loans with the smaller lenders.

But and this is a big but, there will be a price to pay, which will be a much higher interest rate, for let us face facts, despite the scheme rules stating “Lenders will be required to undertake credit and fraud checks for all applicants.

When making their assessment, lenders may overlook concerns over short-term to-medium term performance owing to the pandemic. The checks and approach may vary between lenders.”

That does give them free reign to cherry pick their customers, and some may be prepared to take a risk to lend if they are able to charge more in interest.

I am still awaiting Rishi Sunak to pull his usual stunt regarding SEISS4, that being appear soon and state he is always listening to SME’s and is prepared to act fast, and as such he will bring forward the date when SME’s can apply for that grant. That is how he works and operates so I am of the mindset that is what he will do, unless he has lost all sense of fairness.

Bounce Back Loan repayments are due soon for some of you out there and based on hard facts many of you are worried about those repayments and will not have a penny piece to pay them back with.

Keep in mind you do have the Pay as You Grow options, if you want to kick the repayment can down the road for a bit and see how things pan out over the next few months, but please do the maths regarding the interest you will end up paying and take the best option for you.

As for defaults, they are going to happen, I have opened up comments on the individual bank articles on the main page of this website, so you can now add, for each individual lender, your own comments, worries, feedback on Bounce Back Loans, defaults, top ups and even the Recovery Loan scheme once we know how they have been designed. So, feel free to utilize that option on the respective bank article.

Regarding defaults, I know many of you are adopting a wait and see how they handle them approach, hence me opening up comments on those posts, so you can see how others have been treated when sadly they have had to default.

The logic with me doing that is to allow you to quickly and easily look up each lender and see how others are experiencing things moving forward, rather than having to trawl through 1000’s of my Tweets on Twitter to find that information.

Plus, by opening up comments if I get run over by a bus driven by a banker for example you still have one central place to pass on information and experiences to each other. **taps nose.