With pressure building on the chancellor of the exchequer to increase the CBILS guarantee to 100%, Sam Bamert, the chief executive of specialist lender AskIf, has urged the government to show restraint.
In an open letter to the Rish Sunak, Bamert said there are better ways to reduce complexity, improve access and increase the speed with which businesses can access funding.
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With a finance sector not yet delivering CBILS loans at scale, changing the guarantee is not the solution, says Bamert. If anything, she claims a 100% guarantee would make things worse.
Whilst acknowledging the fact that banks play a critical part in the solution, Bamert believes the sector needs a better tool than the ‘banks need to fund all SMEs’ solution because banks are ill-equipped to deliver loans to the smaller businesses that need it.
Their problem is not the cost of capital (which a 100% guarantee does bring down), it is the sheer administration that banks can’t cope with, said Bamert.
She said: “Since the financial crisis, mainstream banks have been woefully poor at serving many smaller and more idiosyncratic SMEs. Anything that doesn’t ‘tick all the boxes’ is routinely declined”.
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By GlobalDataSince the CBIL scheme was launched, non-bank lenders have seen unprecedented levels of demand.
Bamert said any solution for SMEs must involve bank and non-bank lenders delivering CBILS to ensure comprehensive coverage for SMEs.
She recognises it is crucial to get funding to small businesses across the UK, to enable them to emerge from the crisis strong enough to underpin the health of our communities and the recovery of our local economies.
She urged the government to “use this crisis to deliver a silver lining: a finance sector that is more inclusive now than it was before. That delivers support and funding where it’s needed. That empowers left-behind communities as well as affluent ones”.
