Wednesday 15 April 2020 12:01 am

Businesses still struggling to access coronavirus loan scheme, says BCC

Only two per cent of businesses have successfully managed to access the government’s coronavirus business interruption loan scheme (CBILS), according to a survey published today.

Nine per cent of respondents to the survey by the British Chamber of Commerce (BCC) said they were unsuccessful with slow or no response from lenders the main reason cited.

Read more: RBS pays out 70 per cent of government coronavirus loans

The BCC said: “This suggests firms could still be having difficulty accessing the support through banks, despite the announcements on 2 April designed to simplify and speed up the CBILS process.”

A survey the week previously by the BCC found only one per cent of businesses had successfully accessed the scheme.

Under the programme, businesses with revenue up to £45m can apply to a group of more than 40 accredited lenders for a government-backed loan.

The government promises to pay the lenders 80 per cent of the loan if the borrower does not pay it back.

Critics of the scheme have compared it unfavourably to Switzerland which has channeled billions of Swiss Francs to small businesses through a 100 per cent government underwritten scheme.

Yesterday, Chancellor Rishi Sunak defended the performance of CBILs, saying: “There has been enormous improvement from where we were…the changes that we made are making a difference.”

The scheme was tweaked at the start of April to widen eligibility and prevent banks asking for personal guarantees from directors on loans under £250,000.

Read more: Former business secretary Greg Clark leads calls for overhaul of coronavirus loan scheme

Sunak said he expected to see an acceleration in the number of loans granted in the coming days after bank staff worked over Easter weekend to clear the backlog.

On Sunday, business secretary Alok Sharma said around 4,200 businesses had received loans under the scheme and just over £800m had been paid out.

The survey also found two-thirds of businesses have furloughed staff under the government’s coronavirus job retention scheme. 

Thirty one per cent of those to use the scheme have furloughed between 75 and 100 per cent of their workers, the survey said.

Under the job retention programme, workers are temporarily laid off by the government and paid 80 per cent of their salary by the government up to a maximum of £2,500 a month.

Read more: Coronavirus business loans hit £450m but doubts about scheme remain

Sunak told the government’s daily press conference yesterday that the furlough scheme was “on track” to deliver cash to businesses by the end of April.

The chancellor said the scheme would open on 20 April for submissions and there would be a period of “several days” between applying and receiving the money.

“You should be able to get the cash by the end of the month if everything goes to plan,” Sunak said.

BCC director general Adam Marshall said: “Businesses on the frontline need cash to start flowing from support schemes fast. With April’s payday coming up, we are fast approaching a crunch point, and both the furlough scheme and CBILS facilities need to be accelerated.  

“While we’ve seen a high number of firms furloughing staff in anticipation of the job retention scheme coming online, it is still unclear whether they will start receiving funds before their payroll date, which could exacerbate the cash crisis many businesses are facing.  

“It is essential that the job retention scheme makes payments to businesses as soon as possible. Any delay could mean more livelihoods under threat, more business failures, and more hardship in our communities.” 

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