One of the government’s flagship Covid support measures was the Bounce Back loan, a Treasury-guaranteed loan for small to medium sized businesses to help ease them through the financial problems arising from the pandemic. It was launched on 4 May 2020 with a fanfare so loud you could have heard it from space. Why then, especially given the scheme was withdrawn in April this year, has it taken the Gambling Commission over 14 months to get to grips with the mechanics of the Covid support measure when it comes to applications for operating licences? Coinslot fires some questions at licensing consultant Debbie Bollard about her views on this matter and her experience with some operating licence applications.
Coinslot: According to several operators, the Gambling Commission has tied itself in knots over its licensing conditions for applicants who have secured Bounce Back loans during the Covid crisis. Have you encountered any issues in this area?
Debbie Bollard: I have helped numerous clients to prepare and submit applications for new Operating Licences or changes to their existing Operating Licences during the pandemic and a number of them were in receipt of either a BBIL or CBILs which has delayed the application.
Coinslot: Given the fact that BBLS were the only government option for most businesses in our industry to see their way through the lockdown, were the Commission up to speed on this issue quickly enough?
Debbie Bollard: The Bounce back loan scheme was introduced at the start of the pandemic, but I was only told by an account manager at the Commission at the end of April this year that the Commission was looking into the use of bounce back loans.
Then, in mid-May, another account manager told me that an application was with the legal department along with a number of other applications as they were assessing their position on the use of bounce back loans.
I know it’s very easy to criticise regulators, and I don’t like to join the Commission critics without merit. But we have to acknowledge that this is a year after businesses started applying for them, so they were not that novel!
Coinslot: A number of operators have said that the Commission had created a Catch 22 problem for applicants: you can apply for a license but you mustn’t use a BBL to keep your business running. Is that a fair or accurate assessment?
Debbie Bollard: Not totally, but I can see where the exasperation is coming from.
The Commission requires evidence of funding as part of the application process and where a loan is used, a copy of the loan agreement should be supplied.
From my experience, any businesses that have applied for an Operating Licence and have made use of a BBIL have faced additional delays because the Commission has been assessing a new type of loan and its impact on the application.
Coinslot: Has the Commission been heavy handed and doctrinaire on this issue? It sounds more like the computer says no rather than we need to find a common sense solution – or is Coinslot being unfairly narky here?
Debbie Bollard: When aren’t you!
I was not made aware that the Commission had an issue with the use of BBILs and CBILs until the end of March this year when a number of applications were dragging on beyond the usual 16 weeks.
Eventually I was informed by the Commission earlier this month that “Bounce Back Loans are a new form of financing, which a number of operators are using. In order to consider the implications of the use of these loans, the Commission imposed a hold on applications using this source of funding in order to “obtain advice”.
Coinslot: So what advice is required – and why does it take 14 months and beyond the life time of the loans to get a resolution?
Debbie Bollard: Some BBILs and CBILs do contain restrictions on what they can be used for, but in every case a copy of the loan agreement or terms was supplied with the Application and a quick read through would have identified if there was an issue and this could have brought to the applicants attention so that they could look at possible alternative funding. However, this did not happen, and worse still, applications that involved loans that were silent on their use were also unnecessarily delayed.
In one case the Commission were insisting that there must be further terms and conditions attached to a BBIL even though the relationship manager at the lending bank sent several emails confirming that was not the case; it was so frustrating.
Coinslot: What kind of delays has it caused for licence applicants?
Debbie Bollard: I have had applications submitted last year that have only just been determined – in one case more than 29 weeks later despite being relatively straight forward. And there are now further delays because of a backlog of work at the quality assurance stage with some applications taking 5 weeks to get through the final approval.
Coinslot: Has a solution finally been found?
Debbie Bollard: It depends on who the lender is and what terms and conditions they attached to the loan. For example, Santander do not permit the loan to be used to purchase fixed assets, so if you have used the loan to buy gaming machines that would be an issue.
NatWest’s terms limited the use of funds to the borrower and if any of those funds have been lent to an associated company or business that will be an issue.
On the other hand, Barclays and Lloyds have not attached any conditions on the use of their loan.
Once I realised the issue at the end of April, I went back to account managers to point out where no restrictions applied, but some of those applications have still not been granted.
Coinslot: From your understanding was there any dialogue between the Commission and the banking sector, or between the GC and the DCMS/Treasury to unravel the problems?
Debbie Bollard: That’s not really information I would be given or made aware of.
But I was not told of any; the only information that I got was from some of the Commission account managers who told me their legal department was looking into it.
Coinslot: What recourse was there for applicants? Who was highlighting the issue and who was trying to resolve it?
However, in some cases there has been no resolution; where the terms of the BBIL prevent its use for the purpose of the application, the Commission has taken the stance that by using it the applicant’s integrity is in question and they were therefore deemed unsuitable to hold an Operating Licence.
In other cases, I have successfully persuaded the Commission that the use of the BBIL is irrelevant as the terms do not restrict its use, and in some cases where funds had not yet been used, applicants have had to find alternative sources of funding and revise their application!