Tuesday 19 May 2020 1:59 pm

Coronavirus loans hit £22bn, but just 50 per cent of CBILS lending approved

UK banks have only approved 50 per cent of applications to the coronavirus business interruption loan scheme (CBILS), data showed today, even as overall lending hit £22bn.

CBILS lending data showed British lenders have distributed that cash to more than half a million UK companies, with over £14bn lent out in the form of bounce back loans.

Bounce back loans allow small businesses to receive a loan worth a quarter of their turnover, up to £50,000, within as little as 24 hours.

Of 581,516 UK businesses to apply for a bounce back coronavirus loan, 464,393 have received the money – an 80 per cent approval rate. That equates to 33,000 loan approvals each day since the scheme launched earlier this month.

But while 81,124 firms applied for coronavirus business loans of up to £5m by 17 May, just 40,564 have been approved. That gives CBILS a 50 per cent approval rate, with £7.25bn lent out since its launch on 23 March.

Applications for larger coronavirus interruption loans (CLBILS) have the worst approval rate of all three schemes.

Banks approved just 17.3 per cent – or 86 – of 496 large firms’ requests for loans of up to £50m.

From next week companies with turnovers of above £45m will be able to borrow to £200m on the CLBILS programme.

UK Finance said some applications are still being processed and may not have resulted in a rejection.

But UK firms have criticised banks’ criteria for approving coronavirus loans. SMEs have seen their applications rejected for being classified as an “undertaking in difficulty” under EU rules.

Known as the General Bloc Exemption Regulation, the rule allows banks to disqualify companies from aid.

One firm that spoke to City A.M. fell into this classification after two contracts fell through before a late payment compounded its balance sheet issues.

UK Finance said it has widened the CBILS programme so SMEs can now apply for coronavirus loans from 70 lenders.

And bounce back loans for firms struggling amid the coronavirus lockdown are available from 17 financial institutions.

“The banking and finance industry is committed to helping businesses get through these tough times,” Stephen Jones, chief executive of UK Finance, said.

“Banks stand ready to support businesses large and small, and the changes announced by HM Treasury means firms can access loans from £2,000 to £200m through the coronavirus loan schemes.

“These are just one part of a range of measures from the industry available to businesses including extended overdrafts, capital repayment holidays and asset-based finance.

“It’s important to remember that any lending provided under government-backed schemes is a debt not a grant, and so firms should carefully consider their ability to repay before applying.”