Pace of CBILS loans quickens as businesses face ‘race against time’
In the midst of continued criticism from business owners over slow response times, the banking and finance sector says it has provided over £2.8bn of lending to SMEs so far through the Coronavirus Business Interruption Loan Scheme (CBILS).
According to the latest data published by UK Finance total lending under CBILS has doubled in the week from 14 April to 21 April, with an increase of £1.45bn. Over 9,000 loans have been provided in the same period, with the total number approved increasing by almost 120% to over 16,600.
Lenders have received over 36,000 completed applications so far. Some 16,624 of these applications have been approved to date, while others are still being processed and may be approved over the coming days.
Stephen Jones, chief executive of UK Finance, said: “The banking and finance sector understands the critical role we have in helping businesses through these tough times.
“Frontline staff have been working tirelessly to get money to those viable businesses that need it as quickly as possible, with over £2.8 billion of lending provided to 16,000 firms so far. This lending forms part of a broad package of support provided to SMEs including additional loans, capital repayment holidays, extended overdrafts and asset-based finance.
“We know businesses want to look after their most important resource – their people – and so lenders are offering additional support to firms awaiting grants from the Coronavirus Job Retention Scheme.
“We stand ready to support many more businesses in the weeks ahead, and will continue to work closely with the government to ensure businesses can access the support they need.”
Scott Knowles, chief executive of East Midlands Chamber said that although the increase in firms accessing CBILS is encouraging, there is still a clear need to ensure that the gap between applications received and those processed and approved can be closed quickly to ensure funding can reach the businesses which need it.
He added: “Many firms are urgently trying to access financial support to help them ease cash flow and wage pressures and having to wait for their applications to be processed could be having a critical impact on their operations.
“We are also hearing from a lot of local businesses that accessing the scheme is a complex and lengthy process with no consistent approach between lenders, which is causing real problems on the ground.
“Government and lenders must continue to work together to address these common issues and improve the way the scheme works, so more firms on the frontline can access the cash they need, quickly.”
Despite the quickening pace, the CBI has published two steps governments should take now to get faster support to distressed firms:
- First, accelerate the delivery of CBILs to smaller firms through three actions:
- Develop, with lenders, a fast and simple route to loans under £25k for small businesses who may be completely new to borrowing, possibly backed by 100% government guarantee
- Increase the government guarantee from 80% to 100% for CBILs loans up to £500k, which could improve speed of delivery though it is not a silver bullet. Allow lenders the option to provide a longer repayment schedule for loans up to this ceiling from 6 years to 10 years.
- Streamline documentation to speed up eligibility and viability assessments, with standard templates as in Germany and Switzerland.
Second, provide all firms in England, Scotland and Wales with a three-month business rates suspension (as in Northern Ireland) and consider grant schemes to help smaller firms unable to access existing support.
Dame Carolyn Fairbairn, CBI director-general, said: “As the impact on businesses, livelihoods and the economy grows day by day, it’s vital to ensure help gets where it’s needed most. The current loan scheme is up, running and working for many. Now we need another big push to get money out the door faster.
“This is a race against time, and the only winning strategy is scale, speed and simplicity. Nothing should be left on the table.
“The Treasury, British Business Bank and lenders deserve huge credit for their speed and ambition so far. The millions of jobs they have saved today are vital livelihoods protected for the future.
“But with the lockdown extended there is no room to pause. The financial strain on some businesses cannot be underestimated.
“These recommendations are based on thousands of conversations with struggling firms of all sizes and aimed at helping those who have been left behind so far. A new wave of support is vital to local communities and our small and mid-sized businesses.
“Helping firms that have fallen through the cracks will protect jobs and livelihoods as the crisis unfolds and ensure a solid foundation to build on. It is far more cost effective to stop businesses collapsing now than create jobs in the future.
“The greater the number of companies helped to survive, the sooner the UK economy can restart and revive.”
