MSE survey reveals bounce back loan applicants suffer delays, rejections and credit checks

  • HSBC, Starling and Tide worst service
  • New customers and sole traders struggle to successfully apply
  • One in five forced to wait over a month to hear back

Substantial numbers of bounce back loan applicants suffer delays, rejections and credit checks, a survey of more than 5,000 small business applicants has found. While lenders such as Lloyds and RBS performed well with most people rating them great, far more HSBC, Starling and Tide applicants rated their experience as poor.

Since early May, more than 860,000 bounce back loans have been approved by more than a dozen lenders. The loans – aimed at small businesses and worth between £2,000 and £50,000 with no interest charged or repayments needed in the first 12 months – were billed as being easy to apply for and quick to receive the funds.

Yet in a detailed survey conducted by MSE of 5,580 bounce back loan applicants, for many, the reality has been far from this. Analysis of the survey, carried out between 19 and 26 June, has revealed six key findings. While not a statistically representative poll of applicants, it provides a powerful insight into the way that bounce back loans are being administered in practice.

The six key findings from MSE’s Bounce Back Loan Survey are:

1) Lloyds, Bank of Scotland, RBS triumph while HSBC and Starling leave borrowers with a sour taste
Banking giant Lloyds operated the best application process, according to the survey, with a net positive score of 81%, followed by Bank of Scotland (65%) and RBS (50%). While four of the 14 banks were net negative: Barclays and Starling (-1%) only just, but serious issues were found at HSBC (-45%) and challenger bank Tide (-90%), which both had far more negative feedback than positive.

Overall bounce back loan experience

Lender No. of respondents Net score (1)
Lloyds Bank 590 81%
Bank of Scotland 109 65%
RBS 132 50%
NatWest 565 43%
Santander 727 36%
Metro Bank 75 31%
Yorkshire Bank 96 29%
TSB 128 23%
Clydesdale Bank 61 21%
Co-operative Bank 66 12%
Barclays 776 -1%
Starling Bank 475 -1%
HSBC 1,407 -45%
Tide 292 -90%
(1) Net score is calculated by subtracting the percentage of applicants who said their experience was 'poor' from those who said it was 'great'. The 'OK' votes were excluded.
  1. Sole traders let down by bounce back loan scheme, with limited companies far more likely to be accepted
    While one in four sole traders who received an answer were rejected, only 7% of limited companies were turned down. The worst culprit was Starling, which rejected 57% of sole traders, while one third of sole traders were turned down by TSB, Clydesdale and Metro Bank. In comparison, Starling accepted 93% of applications from limited companies, while TSB, Metro Bank and Clydesdale accepted 81%, 92% and 96% respectively.

  2. One in five waited over a month to hear for a response
    Bounce back loans were originally discussed as being delivered in days, as a speedy solution to business problems in the pandemic. But the survey results revealed that many applicants experienced delays, with 23% having to wait (or still waiting) more than a month to hear back – that’s nearly one in four. This delay would’ve compounded the problems for many struggling businesses that were likely on tenterhooks waiting for this money.

  3. HSBC, TSB and Starling hand out most rejections
    While Lloyds Bank and RBS top the acceptance league with 95% or more of total applications given loans, not all banks were as keen to say yes. Starling only accepted 62%, and TSB (72%) and HSBC (80%) also had significantly lower figures, though many of the HSBC rejections were for new customers.

  4. New customers face upward battle to get accepted for bounce back loans
    Only a handful of lenders opened up bounce back loan applications to new customers, and even some of those eventually restricted them to existing customers. Overall, only one in two (47%) of all applications from new customers were accepted, compared to nine in 10 (89%) of existing customers.

  5. Credit scores and credit checks scuppered applications
    Although credit ratings were not meant to impact firms’ eligibility, more than 300 people who were rejected for bounce back loans, around a quarter cited having failed a credit check.

Martin Lewis, founder of, said: "For many, bounce back loans have been – as they were touted by the Chancellor – a speedy lifeline to support businesses and their owner’s incomes. Yet for a substantial number of people the story has been very different with a catalogue of problems.

"One in five have faced delays of over a month. Sole traders, in particular, have suffered being over three times as likely to be rejected as limited companies. Similar is true of small businesses which didn't have business accounts with a firm offering one of these loans, as they’ve struggled to get any help.

"A significant number cited credit checks as a reason for rejection, even though the loans were touted as 'available to all – no credit checks needed'.

"And of course while the loans were meant to be lender-agnostic as all banks were offering the same product, the experience certainly hasn’t been. While Lloyds has 81% net positive feedback, its major competitor HSBC scored a shocking -45%. It was only beaten by challenger bank Tide at -90%, which has failed to give virtually any loans yet. Tellingly, both these two invited new customers to apply – many of whom have had poor experiences.

"We will be sending a dossier of our findings to the Treasury, the FCA and the British Business Bank to hopefully improve the process going forward."

See MSE’s news story for more details and analysis, including full tables ranking banks for customer experience, rejection rates for sole traders and limited directors, and waiting time.