Thursday 30 April 2020 12:50 pm

Coronavirus small business loan lending tops £4.1bn but concerns remain over scheme

Coronavirus business interruption loan scheme (CBILS) lending has topped £4.1bn, according to bank industry body UK Finance.

Over £1.33bn of loans were approved in the week to 28 April.

The number of loans provided through the scheme has increased by 8,638 over the same period to a total of 25,262, an increase of over 50 per cent.

UK Finance said lenders have received 52,807 completed applications , with 25,262 of these approved to date.

Barclays said it approved 4,361 CBILS loans this week with a value of £835m, while HSBC said it approved 5,295 CBILS loans this week with a value of £765.2m.

The scheme has attracted criticism from MPs, small businesses and business groups who attacked the slow pace of lending and the difficulty some small businesses have had accessing it.

CBILS was set up to offer loans to firms with a turnover of up to £45m. Companies can access the money through more than 40 approved lenders and 80 per cent of the loan is guaranteed by the government.

After criticism of the scheme, chancellor Rishi Sunak this week announced a new bounce back loans programme for the UK’s smallest businesses.

Small businesses will be able to access loans worth 25 per cent of their turnover, up to £50,000, and the government will pay the interest for the first 12 months.

Sunak said banks will not need to perform any “forward looking tests of businesses viability” and that businesses would need to fill out just a “simple, quick, standard form”.

Following the chancellor’s announcement, some lenders said they would relax their criteria for CBILS lending.

Banking body UK Finance said on behalf of the lenders: “Lenders will only ask businesses for information and data they might reasonably be able to provide at speed.”

“We will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability.”

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The British Chambers of Commerce head of economics Suren Thiru said: “While the number of firms accessing CBILS is on an encouraging upward curve, a concerningly high number of firms continue to struggle to access this crucial lifeline.

“The Bounce Back loan scheme is a welcome step toward getting cash to the smallest firms more quickly. The UK government and financial institutions should simplify and standardise the CBILS application processes to unlock access for more businesses of all sizes.

“Serious consideration must also be given to the expansion of grant schemes for firms unwilling to take on more debt repayments.”

Rain Newton-Smith, CBI chief economist said: “Vital funds are getting to the businesses that need them most. The government and banks have been working around the clock to ensure businesses across the UK are being given the right support quickly. This scheme has been a lifeline for many.

“For smaller firms, the 100 per cent guaranteed loan should help give sole traders, micro firms and entrepreneurs a simple route to fast finance to help them stay afloat from next week.

“The financial strain on businesses cannot be underestimated though and with more businesses applying for loans the banks must continue to be responsive to concerns and work at full speed to deliver the scale of support needed.”

Stephen Jones, chief executive of UK Finance, said: “The banking and finance sector recognises the role we must play in getting the country through these tough times, and staff are working incredibly hard to get money to those viable businesses that need it.

“More than £4bn has been delivered to over 25,000 businesses so far through the CBIL scheme, as part of a broad package of support for SMEs including capital repayment holidays, extended overdrafts and asset-based finance.

“The changes to the scheme announced by the chancellor this week will enable lenders to streamline their application processes and help even more businesses access the support they need.

“This extensive support will be complemented by the new Bounce Back Loans scheme targeted at smaller businesses, which lenders are now working at pace to get up and running from Monday.”