Credit, Collections & Insolvency News
UK Finance has announced that a total of £1.1 billion in coronavirus support funding has been loaned to 6,020 SMEs so far.
The total proportion of firms receiving payouts is less than one in four of those who made a claim, with 28,460 applications submitted. Analysis shows that just 2.6% of the money available has actually been loaned by banks. The average value of loans made through the coronavirus business interruption loans scheme (CBILS) has risen to over £185,000.
Stephen Jones, Chief Executive of UK Finance, said “The banking and finance sector recognises the challenging conditions faced by many businesses and the critical role we must play in helping the country get through this crisis.”
“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.”
“I am grateful that so many colleagues worked through the bank holiday so that over one billion pounds of support has now been delivered to businesses. We expect this figure to continue to grow rapidly as lenders work hard to help get Britain through the current crisis.”
The Chancellor of the Exchequer, Rishi Sunak, said “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.”
Like other industries across the country, staffing levels at banks and other lenders are lower than usual as employees self-isolate at home. Coupled with the increased demand for assistance from customers, this means that it may take longer to speak to a member of staff at a bank branch or call centre. Businesses looking to access CBILS are therefore advised to look at their lender’s website to find out the latest information on the support available and how to apply. This information is being updated regularly to provide businesses with guidance and to help them access the finance they need.
They can also consider approaching other lenders, including the 43 accredited CBILS providers, if they are unable to access the finance they need in the first instance.
| 3 April | 6 April | 7 April | 8 April | 9 April | 14 April | |||
| Number of formal applications for CBILS | 22,099 | 23,890 | 28,461 | |||||
| Number of CBILS facilities approved to date | 1,250 | 1,487 | 2,022 | 2,576 | 3,309 | 4,222 | 6,016 | |
| Value of CBILS facilities approved (£m) | 145.79 | 194.60 | 291.91 | 453.05 | 612.67 | 811.34 | 1,115 |
Responding to new UK Finance figures Federation of Small Businesses (FSB) National Chairman Mike Cherry said “This improvement marks a starting point, but while one in five formal CBILS applications are approved, the major banks claim their approval rates for standard commercial loans are many times higher than that. 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.”
“These weekly updates are welcome. However we’re lacking detail about the customer journey from start to finish: how many have enquired? How many have dropped out at the application stage? What happens to those who are rejected? Are banks receptive to those who are not existing customers?”
“And we need to see this data bank by bank so small businesses know which providers are embracing the scheme and which are not. The British Business Bank publishes bank by bank data on its Enterprise Finance Guarantee initiative so we know it can be done.”
“At more than £185,000, the average value of a CBILS loan is high. We need reassurances that the fast-track process we’ve been promised for certain loans worth under £30,000 is working. This will require system changes at certain institutions – those changes must happen quickly so all accredited lenders are supporting the full spectrum of small firms. More detailed data on micro business applications would be helpful.”
“These figures represent an improvement but we need to see much more. If volumes don’t improve then all options should be kept on the table, including an upping of the 80% guarantee. Other European nations like Germany have already opted for the 100% point.”
“And the question of support for early stage, loss making start-ups remains a pressing one. The list of businesses that spent their early years in the red only to go on and be great successes is as long as your arm. They must not be abandoned.”
David Petrie, ICAEW Head of Corporate Finance, said “This is another helpful measure from government to bring cash into businesses, which is a matter of urgency for many medium sized and larger British companies. ”
“However, firms will have important questions about eligibility criteria and the speed and complexity of the application process, which were problems we saw with the CBILS programme for smaller companies. And with many businesses now running very short of cash, we hope funds can be advanced in the short-term to save the thousands of companies battling to stay afloat as a result of the crisis.”