The government has extended applications for its coronavirus business support loan schemes ahead of England entering a second lockdown on Thursday.
Applications for the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS) will now be open until 31 January, the Treasury said.
The schemes provide businesses of various sizes with government-backed loans to help them weather the Covid-19 pandemic.
Small businesses which have borrowed less than the maximum 25 per cent of their turnover (up to £50,000) under the BBLS – which is 100 per cent government-backed – will be able to apply for a top-up to their current loan under the new rules.
The top-up option will be available from next week and firms will only be able to use it once.
City A.M. understands that the Treasury held an urgent meeting with some of the UK’s largest banks earlier today to discuss plans for the BBLS ahead of England entering a second lockdown.
With England facing tougher restrictions from Thursday, concerns are mounting that small businesses struggling with the impact of the new restrictions could struggle to access funding.
Calls for more BBLs lenders to open to new customers
The Bounce Back Loan Scheme, alongside the other government business loan schemes, had been set to close on 30 November.
City A.M. reported last week that all but one of the 28 of the banks eligible to issue BBLs had closed to new customers, leaving some small businesses unable to apply for the loans despite being eligible for funding.
Kevin Hollinrake MP, leader of the all-party parliamentary group for fair business banking welcomed news of the extension, but said clarity was needed on whether accredited BBLS lenders would open to new applicants.
“All banks should be opening the door to new customers,” he told City A.M. “It is incumbent on lenders who can access the scheme to provide funding to businesses that need finance.”
“It reflects badly on the entire banking system if it doesn’t work properly for a significant cohort of businesses, which is exactly where we are right now,” Hollinrake added.
Almost £62bn had been lent out under the government’s business loan schemes of 18 October, according to figures from the Treasury. The majority of this was BBLS lending, with more than 1.3m small businesses receiving a total of £40.2bn via the scheme.
City A.M. revealed some firms have had their loan applications rejected without explanation, while one lender was accused of “inventing” rules after rejecting applications based on a non-existent regulation.
City A.M. has contacted the Treasury for comment.