Menu
Wed, 13 November 2024

Newsletter sign-up

Subscribe now
The House Live All
Health
Health
Turning ambition into action: improving care for women with primary biliary cholangitis Partner content
By Robert Mitchell-Thain, Chief Executive Officer, PBC Foundation
Health
Taking the next steps for working carers – the need for paid Carer’s Leave Partner content
By TSB
Health
Health
Press releases

Rishi Sunak facing calls to speed up coronavirus business loans amid warnings a ‘tiny fraction’ of firms are getting help

Banking body UK Finance said staff were ‘working incredibly hard to help firms access finance’

4 min read

Rishi Sunak is facing fresh demands to beef up a scheme designed to help businesses through the coronavirus shutdown, amid warnings that just a “tiny fraction” of firms are getting the help they need to stave off collapse.

New figures on the Treasury’s Coronavirus Business Interruption Loan Scheme (CBILS) show that 6,020 out of 28,000 small and medium-sized businesses who have applied have so far received funds — double the number that had been handed out a week ago.

The data, produced by banking lobby group UK Finance, show that £1.1bn-worth of the loans - which are 80%-backed by government funds - have so far been made by financial institutions.

But opposition parties have urged the Chancellor to do more to speed up the scheme or risk businesses going to the wall.

Shadow Business Secretary Ed Miliband said: "These figures show that the CBIL scheme is simply not working well enough. We need change now.

"The Chancellor must move to a 100% guarantee of loans for smaller businesses as other countries have done. In this economic emergency, it is the right thing to do.”

The Labour frontbencher added: "In the coming days, businesses are facing critical decisions about their future.

"Ministers must also accelerate the approval of new financial providers, do more to simplify the application process and provide support for good, future growth businesses not currently in profit.

"There also needs to be a loans scheme for larger businesses with turnover over £500m.”

The SNP’s business spokesperson Drew Hendry meanwhile said the Government needed to do more to offer “urgent support” to firms amid warnings Britain is on the cusp of a once-in-a-generation economic downturn.

Mr Hendry said: “The roll-out of the emergency loan scheme is far too slow and too many businesses are not getting the cash they require to stay afloat.

"In other European countries support for business has been rolled out far quicker. After weeks of waiting, it is time for the Chancellor to step up and provide more direct support - speeding up the process and providing more grants not just loans.”

He added: "The 6,020 businesses that have received support are a tiny fraction of the millions of small and medium businesses in the UK. Many businesses aren't getting the urgent cash they need to pay the bills and could go to the wall unless support comes quickly.”

Mr Sunak unveiled a string of changes to the scheme earlier this month, banning banks from requesting controversial personal guarantees - which leave business owners themselves on the hook for loans - for any lending under £250,000 following an outcry from MPs.

“These loans are state-backed, so approvals should be higher still" - Mike Cherry, Federation of Small Businesses

The Government is also covering the first twelve months of interest and fees for for the loans in a bid to shore up companies hit by the shutdown, while the help has also been expanded to larger businesses with a turnover of between £45million and £500m.

The Chancellor said of the latest figures: “Getting finance to businesses is a key part of our plan to support jobs and the economy during this crisis - and we’re working with lenders to ensure support reaches those in need as soon as physically possible.

“Loan approvals have doubled in a week with more than 6,000 businesses benefiting from over £1.1 billion of loans - and it’s vital we continue this upward trajectory.”

That view was echoed by Stephen Jones, chief executive of UK Finance, who said: “Frontline staff in local branches and call centres are working incredibly hard to help firms access finance as quickly as possible amid unprecedented demand. Like all businesses they are working at reduced capacity as many staff are self-isolating or looking after family.”

But Mike Cherry, chairman of the Federation of Small Businesses, said the latest figures should be just a “starting point”.

He added: “These loans are state-backed, so approvals should be higher still. There’s still a lot of work to do.

“Many members tell us it’s difficult to get to the formal application stage – banks are still slow to respond to CBILS enquiries. Even if you do get your forms through, the process is very demanding for the uninitiated.

"We need simplification: banks should look at pre-filling forms based on data they already have on customers, and we shouldn’t have behind the scenes reporting requirements holding up approvals.”

The FSB is urging the Treasury to consider copying Germany and up its guarantee to 100% of the value of all the loans in a bid to get banks lending more.

And they want to see data published “bank by bank” so that small firms know who is and is not lending among the big financial institutions.

PoliticsHome Newsletters

PoliticsHome provides the most comprehensive coverage of UK politics anywhere on the web, offering high quality original reporting and analysis: Subscribe

Podcast
Engineering a Better World

The Engineering a Better World podcast series from The House magazine and the IET is back for series two! New host Jonn Elledge discusses with parliamentarians and industry experts how technology and engineering can provide policy solutions to our changing world.

NEW SERIES - Listen now

Partner content
Connecting Communities

Connecting Communities is an initiative aimed at empowering and strengthening community ties across the UK. Launched in partnership with The National Lottery, it aims to promote dialogue and support Parliamentarians working to nurture a more connected society.

Find out more