NatWest has shut the accounts of some small business customers who applied for government-backed loans to help them get through the pandemic
Several customers of the 62% taxpayer-owned bank have complained that their accounts had been suspended or closed down without explanation after they put in a loan application.
The bank said the reasons for closing the accounts were valid, but the closures came after customers had been approved for loans and were expecting to receive the money in their accounts.
Instead, customers said their money had been blocked without notice, with one saying he was now unable to afford food as a result.
The Treasury is about to enter talks with the UK’s largest banks on a plan to help tackle the tens of billions of pounds of bad debts expected to result from the bounce-back loan scheme (BBLS), which requires only minimal checks on the borrower’s ability to pay the money back.
More than 1m companies have borrowed £32.8bn in just two months under the BBLS, which offers small businesses 100% government-backed loans worth up to £50,000 at an interest rate of 2.5%. There are no fees or interest for the first 12 months.
The bank said the reasons for closing the accounts were valid, but the closures came after customers had been approved for loans and were expecting to receive the money in their accounts.
Instead, customers said their money had been blocked without notice, with one saying he was now unable to afford food as a result.
The NatWest group has been responsible for more than a fifth of the lending across the three government-backed loan schemes. However, there have been claims that the bank initially struggled under the weight of loan applications, and that the fraud checks that needed to be carried out were causing issues.
NatWest is bracing itself for a wave of bad debts, but on Sunday denied reports that it plans to make cost savings of £3bn over the next five years.
The bank, which changed its name from RBS last week, said a report in the Sunday Times that it was planning to reduce its annual costs from £7bn to £4bn was inaccurate. “We do not have any plans of this type,” a spokeswoman said.
The Bounce Back Loan Scheme (BBLS) is now closed to new applications, including applications for Top-Ups.
BBLS applications received by 23.59 on 31 March 2021 can be processed through to 14 April 2021. Check the expiry date on your application form to submit your documents online in time to be considered for lending under this scheme.
If you’re waiting for us to open your loan servicing account to service a Bounce Back Loan, we’ll be in touch shortly with your first stage loan documents when we’ve opened your account. There’s no need to get in touch at the moment.
If you have a query about BBLS, or wish to discuss an outstanding application, please contact us using your usual bank contact.
