NatWest along with all other lenders has seen massive demand for bounce back loans, the latest measure in the UK Governments economic fight against the Corononavirus. NatWest has warned its customers that scammers are exploiting the new Bounce Back Loans scheme (#BBLS) after the bank sees an ‘unprecedented number’ of people apply.
The Fintech Times speaks to NatWest on how it is managing the launch of the new Bounce Back Loans scheme
- Small companies can apply for loans of up to £50,000 under the government scheme that launched last Monday to help them survive the impact of coronavirus.
- It is designed to be simpler and quicker than the existing Coronavirus Business Interruption Loan Scheme (CBILS).
- Loans of up to 25 per cent of their turnover are available for up to six years, at a fixed rate of 2.5 per cent. The first year’s interest and fees are paid for by the government.
According to NatWest, it has seen an extremely high level of demand for the loans.
Kate Dickins, MD of Government Schemes & External Partnerships at NatWest, told The Fintech Times: “We had 65,000 applications in the first 48 hours and that is an unprecedented number of digital applications for that time period. If we look at our call centres, it’s a lowball to say we have double the traffic that we normally do.”
“Everybody was mindful that CBILS only went so far in solving a problem where we’ve got good businesses who’ve been disintermediated from their clients and they’re losing their ability to service. CBILS does a good job in the market segment that it is in, but if you are a micro SME and you have just started your business, this [BBLS] really serves that end of the market where they don’t necessarily have robust money resources.”
Some banks have been criticised for being slow to process loans and NatWest admits that it initially noticed ‘a slightly higher number of drop-outs and outages’ than it was expecting.
“So, we had number of companies drop out of the journey and we had a team of people look into what was going on,” says Dickins. “And, we discovered that what happened was that a few people hit our fraud buffers. These buffers are really important in times like this because we want to make sure that we’re supporting customers in the right way, but equally, we don’t want to give money to fraudsters.”
“Some were legitimate declines, but where somebody has not done something wrong and have got caught in the filters, then we wanted to get back to these people very quickly and make sure that we could get them back into [the system] and we can help them.”
There are also concerns that businesses may see the bounce back loans as ‘easy money’ and not realise that this type of finance is debt, not a government or bank grant. NatWest said it is important that customers understand that they are taking on a debt.
“We spend a lot of time talking to our customers about liability in normal times and because people hear things like ‘government backed scheme’, they can almost think ‘oh, money!’,” says Dickins. “So, it is important that our customers understand what they are taking on and we want to help people on that journey.”
“BBLS is a self-certification scheme, so the obligation is inherently on the customer to make that decision for themselves. But that’s a decision that everybody needs to think about appropriately because they will have to pay it back.”
“Now, the scheme has been set up to make it as easy as possible so there is an element of trust there for people to be sensible and not take on something beyond their control.”
“But we’re seeing figures coming in where people are taking less than what is available, which suggests there’s an element of people being judicious here. Some people may latch onto that free money thing, but when you look at most micro business owners and SMEs, they’re not looking to profit, they’re looking to survive.”
NatWest has issued a warning on its website to customers that it is aware that scammers have started to use the bounce back loans to target its customers via fraudulent calls – known as phishing.
Read the full interview, looking back to the start of the CBILS offering as part of our Weekend Long Reads
What is the Bounce Back Loan Scheme (BBLS)?The BBLS is a government initiative to help small and medium-sized businesses access fiance more quickly during the coronavirus outbreak.The government provides lenders with a guarantee for 100% of the loan but the borrower remains liable for all of the debt.Businesses can borrow from £2,000 up to £50,000 - up to a maximum of 25% of their turnover in fixed six-year loan terms, with no early repayment fees if they wish to repay the loan early. Interest rate is 2.5% fixed with interest for the first 12 months paid by the government.