Bounce Back Loan and Overdraft

kugel

I've just received the business bounce back loan from HSBC for £3000 within 1 day. I have an overdraft facility with them for £1000 and I was overdrawn as much. They opened a separate loan account for £3000, then deposited this into the current account. So now effectively the loan has been £1000 less that requested and now I have to pay interest of the overdraft as well as for the loan. Is HSBC allowed to do this?

lumencreative

Surely if HSBC have cleared your overdraft with the loan, you still effectively have the same amount as there’s nothing stopping you from going £1,000 overdrawn again? Not really sure what the problem is. 

ELLYP

Surely you can just take £3000 out of the account and still be £1000 o/d? 

Grumpy_chap

You won't be paying interest of the overdraft if it has been cleared by the loan.

kugel

Of course I won't be paying interest for the overdraft if it was cleared by the loan. But it means that effectively I've been only given £2000 as a loan with 2.5% interest, whereas the other £1000 will incur much higher interest as it's now part of the overdraft. Also having a loan of £3000 on top of an overdraft loan for £1000 obviously gives a total loan of £4000.

Jeremy535897

Yes, they have used £1,000 of the amount of your bounce back loan to repay your overdraft. You now have a bounce back loan of £3,000 with a nil interest rate for 12 months, and no overdraft (and no overdraft interest to pay). If you spend £3,000 tomorrow, you will have a bounce back loan of £3,000 and an overdraft of £1,000 again. Until you spend at least £2,000 more, they are actually doing you a favour by stopping your overdraft interest accruing. If they took away your overdraft facility, then you would have some cause for complaint.

dunstonh

 They opened a separate loan account for £3000, then deposited this into the current account. So now effectively the loan has been £1000 less that requested and now I have to pay interest of the overdraft as well as for the loan. Is HSBC allowed to do this?

That is what is meant to happen.   i.e. you take out a loan and the proceeds of the loan are paid into your business account.

 But it means that effectively I've been only given £2000 as a loan with 2.5% interest, 

No it doesn't.  You have been given £3,000 just as you applied for it.   

 whereas the other £1000 will incur much higher interest as it's now part of the overdraft. 

It won't incur any interest as you are no longer overdrawn.   However, if you want the £3000 out then you will go back into your overdraft just as you were before and pay the same interest/fees.

Also having a loan of £3000 on top of an overdraft loan for £1000 obviously gives a total loan of £4000.

You no longer have an overdraft of £1,000 though as the loan cleared it.