Tuesday 2 June 2020 10:46 am

UK coronavirus loans top £31bn but just half of CBILs approved

Save our SMEs

UK businesses have borrowed £31bn from banks through the government’s coronavirus loan scheme, but the approval rate on its flagship CBILs programme is still languishing at around 50 per cent.

Figures released today showed that the three main coronavirus loan schemes have helped firms access £31.3bn. The bulk has been through the “bounce-back” loan scheme, which has lent out £21.3bn.

Read more: Lloyds boss says bank can absorb coronavirus loan defaults

Companies have now borrowed £8.9bn through the flagship coronavirus business loan interruption scheme (CBILs). Yet the approval rate is just 51 per cent, with many firms reporting they cannot access the cash they need.

The UK government has intervened dramatically in the economy since the coronavirus pandemic began. Its job retention scheme, which pays workers wages, is supporting more than 8m people.

But the CBILs programme, which offers loans of up to £5m to struggling companies with 80 per cent guaranteed by the government, has been criticised by firms finding it difficult to get the cash they need.

In response, UK chancellor Rishi Sunak created the bounce-back loan scheme for the UK’s smallest firms. Companies can take out loans of up to £50,000, with the government guaranteeing 100 per cent of the debt.

CBILs approval rate at 51 per cent

The bounce-back loan scheme has taken off dramatically, lending far more than CBILs in a much shorter space of time. Almost 700,000 of the UK’s smallest businesses have received money out of 870,000 applications.

But many firms that are too big for bounce-back loans report that they are struggling to get the cash they need from CBILs programme or its bigger counterpart, the CLBILs scheme.

The approval rate is currently just 51 per cent. More than 89,700 firms have applied for money through CBILs but only 45,840 have received any.

Read more: City urges government to hand coronavirus loans to firms hit by EU state aid rules

Yesterday, City groups said part of the problem could be European Union state aid rules. With the UK in a Brexit transition period, EU rules apply to the scheme and rule out highly indebted or loss-making firms from receiving loans.

The CBI, British Retail Consortium and UK Hospitality said: “Important regional employers with private equity in their ownership – a major feature of the UK business environment for firms seeking investment for growth – are disproportionality impacted.” 

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