UK banks have now lent £453m through the government’s coronavirus business loans scheme as it picks up following an overhaul, although a large number of firms are still struggling to access the cash they need.
The Treasury said today that more than 2,500 loans for business had been approved as of yesterday via the coronavirus business interruption loan scheme (CBILS). This was up from Monday’s 2,022 figure that was revealed yesterday by City A.M.
It also announced that industry body UK Finance will start to publish regular updates on the scheme from next Wednesday.
Yesterday’s CBILS figures mark a significant increase from last Wednesday’s, when only £90.5m had been lent out to 983 businesses.
Yet the number of loans handed out is still only a small proportion of the number of enquiries companies have made about the scheme, which range in the hundreds of thousands.
Those requests are coming from some of the almost 6m small and medium-sized firms in the UK. They have monthly payroll costs of roughly £41bn, according to economic consultancy Fideres.
The CBILS programme offers loans via banks to small businesses with turnover of up to £45m. It was launched as part of the government’s £330bn coronavirus lending pledge.
Business owners criticised the stringent terms, however, leading chancellor Rishi Sunak to overhaul the scheme last Thursday. In particular, he got rid of the rule that said firms must have exhausted commercial options first.
The Treasury today said the revamp is working as intended. “We’re working with the banks to get this support out. We’re making good progress,” a Treasury spokesperson said.
Loans still too slow for many
Yet many firms report that the service is still not working properly. Some have said they have requested assistance but have not heard back from banks.
Adam Leon, managing director of recruitment firm Orlik Leon in Bath, said the slow pace of the CBILS application process meant he had to take out an overdraft from his bank Barclays to tide him over until he received his loan.
“When I approached the bank I was told the process would take two-to-three weeks,” he told City A.M.
“Today I was told I will be lucky if I get it in four-to-five weeks. As a result the bank has offered me an overdraft which I had to sign a personal guarantee for to get through the eight-week period.”
Leigh Bryant, the director of motorhome repair company LNB Towbars in Bristol told City A.M. he had applied online for CBILS through Natwest, Barclays and Hitachi Capital. But he said he was yet to hear back from any of them.
“There must be millions of small businesses like me that are so dependent on that money because we don’t have the cash flow to carry on for months at a time with nothing coming in,” he said.
Mike Cherry, national chair of the Federation of Small Businesses, said: “We’re hearing reports that – despite these being ’emergency’ loans – the application process for securing them is still very demanding. Of course lending can only be made to viable businesses, but banks need to understand that time is of the essence.”
Banking industry body UK Finance, which compiles the figures, said lenders are “working hard to provide loans to all viable businesses who need it as quickly as possible”.
A spokesperson said banks are committed to helping the country “through this difficult period”.