TSB Intermediaries has made changes to its self-employed lending criteria due to the pandemic.
The updated guidance takes into account applicants receiving Covid support such as the Self-Employment Income Support Scheme (SEISS) and the Job Retention Scheme.
It adds that these changes are will be considered for all decisions in principle keyed from Friday 20 August.
The changes cover three areas, self-employed income, government assistance and underwriting.
The changes around self-employed income include:
The lender has increased the loan to income multiple for self-employed applicants from 4.25 to 4.49.
For sole traders, partnerships, or limited liability partnerships, the latest year’s self-employed income evidence must be for the 2020/21 tax year.
Directors of a limited company must provide evidence with the latest trading year-end date no greater than 15 months old.
The firm will no longer accept signed company accounts to evidence self-employed income.
The changes around government assistance include:
If applicants have received SEISS grants in the 2020/21 tax year (grants 1 to 3), these will be deducted from the self-employed income keyed in.
The lender requires a screenshot from HMRC showing SEISS grant history for all self-employed applicants, whether claimed or not, (excluding directors of limited companies).
If applicants have claimed SEISS grants (1 to 3) the firm requires full details of the claim, available as a downloadable pdf.
Brokers should upload this additional material to their cases together with income evidence, as there won’t be a separate case requirement.
The changes around underwriting include:
The firm says where there’s been more than a 10% drop in self-employed income over the last year, the application will automatically be referred to underwriters for review. Business bank statements for the last three months must be provided.
If a case is referred to underwriters and the applicants have bounce back loans or Coronavirus business interruption loans, these will be considered to ensure ongoing affordability but should not be keyed as a commitment.
