The UK’s coronavirus business loan scheme has half the approval rate of its German equivalent, data has shown, as chancellor Rishi Sunak mulls the creation of a new programme targeted at the country’s smallest businesses.
The latest figures from banking body UK Finance showed on Thursday that 16,600 firms had received loans worth a total of £2.8bn through the coronavirus business interruption loan scheme (CBILS). There was an acceptance rate of 46 per cent.
Through CBILS, lenders offer loans worth up to £5m to firms with turnover of up to £45m. They are 80 per cent guaranteed by the Treasury.
The approvals rate pales in comparison to the equivalent German scheme, which also released numbers last week. It has lent €8.5bn (£7.4bn) through state bank KfW to 13,000 firms, with an approval rate of 98 per cent.
The UK’s CBILS scheme has faced criticism for including a 100 per cent loan guarantee like similar schemes in other countries.
Yet the UK Treasury has said it is difficult to make direct comparisons because countries’ package of measures vary. For example, the UK is also paying 80 per cent of furloughed workers’ wages.
Sunak said last week: “When you look at the totality of what we’re doing, it’s more significant in scope and in scale of most of those other countries [offering 100 per cent loan guarantees].”
However, Sunak is reportedly preparing to launch a new coronavirus support scheme that offers 100 per cent guarantees on loans for roughly 1m of the smallest businesses in the UK, which typically have only a handful of workers.
It could launch as soon as this week, the Financial Times reported. A Treasury source said no decision had been taken but underlined that the chancellor will not make changes to the CBILS scheme.
The Taxpayers’ Alliance, a conservative pressure group, today said the UK’s scheme was being held back by an overly complex application process that is seeing due diligence rule out many firms. Taxpayers’ Alliance research director Duncan Simpson said: “The scheme needs to be streamlined.”