T304 – Standard Business Loans Questions & Answers (Q&A)

We recently wrote to some customers about their business loan. When these customers applied for a business loan with us, we provided them with a Base Lending Rate (BLR) Loan, but we should have made the standard business loan available to them.

The BLR rate has increased and as a result of being on the BLR Loan, we have charged a higher rate of interest on their loan account compared to the interest we would have charged had they been on the standard business loan. Therefore, we are now providing these customers with a refund.

If you got this letter these Q&A’s may help.

Why have I received this letter?

When you applied for this business loan with us, we should have made another type of business loan available to you based on the loan amount and term. To explain further, we provided you with the Base Lending Rate (BLR) Loan, which you accepted, but we should have made a standard business loan available to you.

The BLR rate has increased and because you are on the BLR Loan and not a standard business loan, we have charged a higher rate of interest on your loan account for a period of time which is why we are now providing you with a refund.

Although we charged a higher rate of interest, this has not affected your monthly repayments.
What is a standard business loan?

Standard business loans are loans we provide to businesses that are tailored to the business’s circumstances and loan criteria.
Are there different types of standard business loans?
Yes, our standard business loan products include;
1. Our Small Medium Enterprise (SME) Variable Rate Loan product has a variable interest rate, which is set by us and means the rate can change throughout the term of the loan.
2. Our SME Fixed Rate Loan product has a fixed interest rate, which remains unchanged throughout the term of the loan.
3. The Standard Variable Business Loan had a variable interest rate which was set by us and meant that the rate could change throughout the term of the loan. This rate was no longer available for new loan applications after 16 September 2017.
What is a Base Lending Rate loan?

The Base Lending Rate loan is primarily available for business loans greater than €300,000. It is also available for business loans less than €300,000 in certain circumstances.

The interest rate on this loan is made up of an agreed interest margin plus a base lending rate. The agreed interest margin is outlined in the Credit Agreement. Our base lending rate is determined by calculating the 3 month EURIBOR (Euro Interbank Offered Rate) reflecting a daily average of this rate over the previous 3 months and is updated weekly.

In line with our Terms and Conditions, we may change the composition of the Base Lending Rate, as we do with all our variable interest rates.
I have more than one business loan, how do I know which one is affected?

We have sent you a letter for each affected loan. The account number will appear on each letter.
What does my total refund include?

Your refund has been calculated based on the difference between the rate we charged you and the rate we would have charged you if your loan was on the applicable standard business loan, whenever this rate was lower. It also includes a payment for compensatory interest.
What is compensatory interest?

Compensatory interest is an additional payment that we have provided you for making this error on your account.
What changes did you make to my loan account?

If your loan account is open, we have adjusted your interest rate. We also adjusted the balance on your loan account. This is outlined in your letter and we have not changed your monthly repayments.
How did you determine my new interest rate?

The new lower interest rate that we have applied is specific to your loan account as it matches the rate that you would have been on had we provided you with the relevant standard business loan. From November 2023, your loan account will be on the rate it should have been on, had we not made this error.
Why did you apply my refund to my open loan account?

We applied your refund to your loan account to ensure that any residual balance does not occur as a result of this error. This will appear on your account as “AIB Payment T304”.

However, a residual balance may occur on your loan account if you miss repayments or only make partial repayments.

If you have a current or appropriate deposit account with us, we have put your compensatory interest payment into that account which is outlined in your letter. The payment reference will appear on your account as “AIB Payment T304”.

If you do not have a current or appropriate deposit account with us, we gave you this payment in a cheque, which we enclosed with your letter. You can use your payment as you choose. This will not affect your right to complain.
My account is closed. Why did I not get a cheque?

If your loan account is closed and you have a current or appropriate deposit account with us, we have put your refund and compensatory interest payment into that account which is outlined in your letter. The payment reference will appear on your account as “AIB Payment T304”.

You can use your total refund as you choose. This will not affect your right to complain.
Has the Central Bank of Ireland (CBI) been told?

Yes, we have told the CBI. We have kept them up to date on everything we are doing for our customers.
Has this affected my Central Credit Register (CCR) record?

No, your CCR record has not been affected as a result of our error. This is because your monthly repayments are correct and have not changed.

However, if your loan account went into arrears or if arrears were to occur on your loan account in the future, this may limit your ability to access credit in the future.
What steps have you taken to make sure that this won’t happen again?

We have updated our internal procedures and put additional measures in place to ensure that this does not happen again.
Who can I speak to if I have a question or want to complain?

If you have a question about the information included in our letter or want to complain, you can ring us on 0818 726 726, between 9am and 5pm, Monday to Friday, excluding Bank Holidays.

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T304 – Standard Business Loans Questions & Answers (Q&A)

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