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April 30, 2020

Lenders provide over £4bn to SMEs through CBILs

By Alejandro Gonzalez

The banking and finance sector has provided over £4.1bn to SMEs so far through the Coronavirus Business Interruption Loan (CBIL) scheme, UK Finance has revealed.

The figure covers lending to 28 April and forms part of a broad package of support to help businesses. Over £1.33bn of loans have been approved in the week from 21 April to 28 April 2020.

The number of loans provided through the scheme has increased by 8,638 over the same period to a total of 25,262, an increase of over 50 per cent.

The banking and finance sector is providing a range of support to SMEs to ensure they can receive the help most appropriate to their needs, including capital repayment holidays, overdrafts, working capital extensions and asset-based finance.

Lenders have received 52,807 completed applications under the CBIL scheme so far. (This figure includes approved applications, those applications that are still to be processed, applications that have been declined and those applications that may turn out not to be eligible or cases where customers will decide not to proceed.)

Of the 52,807 applications, 25,262 have been approved to date, while more applications are still being processed and are expected to be approved over the coming days.

The average value under the scheme is £165,000.

Mike Cherry, the national chairman of the Federation of Small Businesses, said: “While the volume of CBILS lending has almost doubled over the last week, the average value of facilities secured through the scheme remains high. This initiative has not worked for the small firms that make-up 99% of our business community: customer service has been poor, the application process has been arduous, and the wait times for decisions have been lengthy.

“Less than half of applications have been processed, and we know that even getting to the application stage can be a nightmare. We don’t even have sight of decline rates or a bank by bank breakdown of how CBILS is progressing.”

Following reforms to the CBIL scheme introduced this week by the Treasury and British Business Bank, supported by regulators, the largest lenders have announced they will not require forward-looking financial information and will only ask businesses for information and data they might reasonably be able to provide at speed.

This should streamline the application process and help lenders provide financing to businesses who need it as quickly as possible.

The British Business Bank approved four more lenders for accreditation under the CBIL scheme this week, bringing the total number of accredited lenders to 52.

This means businesses can now access financial support under CBILS from a wide variety of firms.

The industry is also working closely with the Government and regulators to deliver the new Bounce Back Loans scheme which will make it quicker and easier for smaller businesses to apply for and access the finance they need.

On the Bounce Back Loans, Cherry of the FSB said: “The new bounce back scheme offers real hope in this space. We’re several weeks into the lockdown – with many business owners having to pay wages, utility bills and rent with no revenue coming in – so its launch can’t come soon enough.

“It must be live from 9am on Monday [4 May] as promised – with money in accounts by the end of next week at the latest. Those that have been refused a CBILS facility should be written to with the offer to apply for a bounce back loan, and those mid-way through a CBILS application given the option to change tack. It’s critical that business owners have access to a streamline bounce back application process through any bank where they hold a consumer or corporate account.

“We have no idea what interest rates will look like on bounce back facilities after the initial fee-free 12 month period is up. We need clarity on that front urgently, with a recognition that these are emergency facilities for firms facing unprecedented hardship.”

Stephen Jones, chief executive of UK Finance, said: “More than £4bn has been delivered to over 25,000 businesses so far through the CBIL scheme, as part of a broad package of support for SMEs including capital repayment holidays, extended overdrafts and asset-based finance.

“The changes to the scheme announced by the Chancellor this week will enable lenders to streamline their application processes and help even more businesses access the support they need.

“This extensive support will be complemented by the new Bounce Back Loans scheme targeted at smaller businesses, which lenders are now working at pace to get up and running from Monday.”

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