Just 2,022 loans have been made to the UK’s small and medium-sized firms through the government’s coronavirus business lending scheme.
There have been around 300,000 enquiries so far, meaning a paltry 0.65 per cent have resulted in coronavirus business loans.
The latest figures, which were compiled by industry body UK Finance but obtained independently by City A.M., showed £291.9m had been lent as of yesterday via the coronavirus business interruption loan scheme (CBILS).
There are almost 6m small and medium-sized firms in the UK. They have monthly payroll costs of roughly £41bn, according to economic consultancy Fideres.
CBILS was launched on 23 March and offers loans to small businesses with turnover of up to £45m. Companies can access the money through more than 40 approved lenders. And 80 per cent of the loans are guaranteed by the government.
Business owners have criticised the programme, however. They say stringent requirements from the government and banks have stemmed lending. Last Thursday, chancellor Rishi Sunak ditched many of the demands on businesses.
By Wednesday, just £90.5m had been lent out via the scheme in 983 loans. The latest figures therefore show the number of loans made through CBILS has doubled since Sunak made the changes, a point Treasury sources were keen to underline last night.
Yet the number of loans made as a percentage of the number of enquiries has fallen in recent days, City A.M. can reveal.
On Wednesday, the rate was around 0.74 per cent. When online and phone enquiries are taken into account, the rate was roughly 0.65 per cent as of yesterday. The figure is likely to rise as applications are processed, however.
According to the UK Finance data, 52,710 phone enquiries and 256,483 online enquiries had been made by yesterday. Yet only 2,022 loans had been approved and £291.9m given out.
Financial services industry body UK Finance collects and compiles information from banks each day about their lending through the scheme.
‘Significant bottlenecks’ in loan scheme
Edwin Morgan, director of policy at the Institute of Directors (IoD) business group, said it was “encouraging” to see that more loans had been given out since last Wednesday.
Yet he said: “There are clearly still significant bottlenecks.”
He added: “If businesses have to go much longer without funds they could fall by the wayside.”
A Treasury spokesperson said: “We’re working with the financial services sector to ensure that companies feel the full benefits from this support.
“We’re taking unprecedented action and have announced £330bn in business loans and guarantees, paying 80 per cent of the wages of furloughed workers for three months, VAT and tax deferrals, introducing cash grants of up to £25,000 for small companies.”
A UK Finance spokesperson said: “Lenders have been working closely with the government and British Business Bank since implementation to ensure the scheme can operate in the best way possible.”
Sunak’s coronavirus loans revamp ‘important’
In response to business uproar, Sunak scrapped the CBILS requirements that directors give personal guarantees on loans. He also ditched a requirement that firms should have been turned down for commercial lending first.
UK Finance said these “are important changes that should help viable businesses access the help they need”.
Chairman of the Federation of Small Businesses Mike Cherry said he welcomed the Treasury’s move to get rid of certain conditions.
He said he hopes the changes “will help bring up this derisory sub-one per cent approval rate for CBILS applications”.
Yet he also called for more transparency around the process, so the government and banks can be held to account. “We need to see data on applications published on a weekly basis.”