One common complaint I am receiving about the Recovery Loan Scheme is that it is complicated, well there is a reason it appears to have been designed that way some people are now alleging, and that is to benefit the army of Brokers circling applicants that the British Business Bank have given the green light to, who can bag up to 3% (or even more) of the total loan amount applicants apply for! Talk about bringing the Government into disrepute, shame on the BBB.
Up to 3% may not sound a lot but keep in mind £6.1b in CBILs were facilitated by brokers that the British Business Bank are rather “friendly” with, which was around 30% of the total, and as such there are some huge amounts of cash Brokers can bag.
Why was the scheme not designed in a nice and straight forward way you may ask, well I am asking myself that question too, the answer that a number of people are now suggesting, is that it is the British Business Bank that are tasked with overseeing the running of the scheme and they have had a huge input into the schemes design too.
Some could say that by being designed in such a complicated way many SME’s are going to simply give in trying to apply themselves and ask a Broker to try and sort them out a Recovery Loan, and of course Brokers will be happy to help.
British Business Bank Dragging Their Heels Getting Lenders Onboard
In fact, you only have to look at the number of lenders that the British Business Bank have so far accredited that being just 18 of them (at the time of writing this), and the fact there are loads of brand new lenders that the British Business Bank have not even set up a fully operational system so they can apply to get accredited yet, why not you may ask?
Plus, lots of CBILs lenders also are eager to get onboard, but alas once again the British Business Bank have not put in the time or effort to get them all approved via their “accelerated accreditation” procedure, that gives those with a suspicious mind the impression it has been alleged, that the BBB are pushing people into the hands of those “money hungry” brokers.
Brokers Have Previously Broke the Rules During the Other Loan Schemes
A guidance document is being put together with the help of the British Business Bank laying out the “rules” that Brokers are supposed to follow, however the BBB are eager to distance themselves from Brokers and whatever they get up to, in as much as Brokers are not allowed to say they are “accredited by the British Business Bank” and you should ask yourself why.
Surely being so “friendly” with some Brokers you would think the British Business Bank would get involved in some way in overseeing the activities of the Brokers they gleefully talk to and do webinars with.
During the Bounce Bank Loan scheme for example I did spot several Brokers charging fees to “help” people get a BBB, when the guidance stated no fees should be charged. I did report those I spotted to the relevant Government departments.
Poor Rishi and Most SME’s Cannot Win
Rishi Sunak does dream up some interesting loan schemes, but it does appear that by entrusting the British Business Bank to make them live and set the criteria he just cannot win, and in turn that means many SME’s are going to also feel like banging their heads against the wall when trying to get a Recovery Loan, in fact they already are.
Just be careful when applying for a Recovery Loan, keep in mind many more Lenders will come onboard soon, some of which may be prepared to lend to some of you that may not have an account with them and may help those of you that have a slightly less than perfect credit score too.
As for whether you should make use of a Broker, please think long and hard, take your time understanding what you need to supply to Lenders so they can process your application, and ask them if you have any questions.
There is nothing that a Broker can do to get you a Recovery Loan that you cannot do yourself when you set aside some time to work out how the scheme has been designed and what you need to supply to get one.
**I should add whenever I point out things such as those above, I do start to take a lot of stick and get abuse from certain Brokers, I have documented proof of that, so now this is published I am expecting the same, not that I care, SME’s need to be aware of the above and I am happy to put it out there.
In fact, here is a challenge, if you are a Broker and feel the service you offer is going to help SME’s and those who need a Recovery Loan to “recover” drop me an email and this time instead of hurling abuse, explain how you will do that and explain the thinking behind the fees you charge, if you can convince me and you are happy for me to do so, I may just pop it up on this website.
Watch the video below, and you will see staff from the British Business Bank and people from the National Association of Commercial Finance Brokers (NACFB) and you will hear it said to those Brokers that the scheme is “complicated” by way of the fact is involves “more work” for Brokers, and make up your own mind if all involved are giddy with excitement that they can cream off a healthy commission/fee (call it what you will) from those they offer “guidance/help” to.