A revamp of the coronavirus loan scheme for businesses has been welcomed by banks after they faced criticism for delays.
The government has pledged to guarantee £330bn of loans but only £14bn has been lent so far. The coronavirus business interruption loan scheme means businesses with a turnover of up to £45m can apply for a loan of up to £5m.
Small firms say they have struggled with the criteria for the government-backed loans, which are being issued by high street banks and other lenders.
Chancellor Rishi Sunak said lenders would be banned from requesting personal guarantees for loans under £250,000. He also pledged “operational changes” to speed up lending approvals.
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RBS chairman Sir Howard Davies said there had been some problems but expects to see a “sharp increase” in lending to small firms in the next few days.
Speaking to the BBC, he said the process of checking borrowers’ eligibility had been “difficult” and the bank had struggled with the demand as inquiries jumped “by 45 times” in the week.
“We’ve had good discussions with the Treasury and small firms, and I think the changes announced overnight will make quite a big difference,” he said.
HSBC also welcomed the changes to the coronavirus loan scheme and apologised for delays in its service.
In a statement, the bank said: “HSBC UK is committed to supporting UK businesses through these challenging times, and will continue to launch new measures to alleviate some of the pressures that our customers are facing including preferential rates for those within the ventilator business to help combat the threat of Covid-19.”
“We apologise that it has taken our customers longer than usual to contact us and want to reassure them that we are doing all that we can in these difficult times to get our service levels back to where they were before Covid-19 hit the UK.”
David Oldfield, group director of commercial banking at Lloyds, said: “This is a welcome broadening of the scheme which will mean that many more eligible businesses can benefit from 0% interest on term loans for the first 12 months.”
“We’re pleased too by the announcement of [the coronavirus large business interruption loan scheme] which provides much needed help for larger firms. We will continue to do all that we can to support our clients, large and small, in these difficult times.”
Businesses welcome new measures
The Treasury’s widening of the loan scheme has been welcomed by industry bodies.
Chief executive of industry body UK Finance, Stephen Jones, said: “The reforms to the government scheme confirmed by the Chancellor are important changes that should help viable businesses access the help they need.”
Dame Carolyn Fairbairn, director-general of the CBI said: “The chancellor’s measures are a big step forward. They will help deliver cash faster to firms battling for survival in the headwinds of the pandemic.”