Coronavirus: Government-backed small business loans hit £4bn

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
CBILS form a core part of Chancellor of the Exchequer Rishi Sunak speaks during a media briefing on coronavirus in Downing Street, London, Monday April 20, 2020. (Pippa Fowles/10 Downing Street via AP)

Banks, fintechs, and building societies have now lent £4.1bn to small businesses under the government-backed coronavirus business interruption loan scheme (CBILS).

The latest figures published by industry body UK Finance on Thursday show an additional £1.3bn has been lent to small businesses over the last week.

25,262 loans have now been approved by the scheme’s 52 accredited lenders. Collectively, they have received more than 50,000 completed applications.

“The banking and finance sector recognises the role we must play in getting the country through these tough times, and staff are working incredibly hard to get money to those viable businesses that need it,” UK Finance chief executive Stephen Jones said in a statement.

CBILS forms a core part of the government’s £330bn package of support for businesses during the COVID-19 pandemic. Small businesses can borrow up to £5m under the scheme, with the state guaranteeing 80%of the loan.

While Thursday’s figures show solid momentum, the scheme has been consistently criticised for the slow speed at which it is getting cash to businesses.

“A concerningly high number of firms continue to struggle to access this crucial lifeline,” the British Chamber of Commerce’s head of economics Suren Thiru said in response to Thursday’s figures.

Business-owners have complained about complex and confusing application processes and a lack of communication from banks.

Banks, meanwhile, have struggled to quickly get lending programmes up and running at the scale required. Barclays (BARC.L) chief executive Jes Staley said this week “the intent of the banks has been in the right place” but the operations have put “our people under enormous stress and strain.”

Chancellor Rishi Sunak overhauled the scheme on Monday to make the application process simpler in a bid to speed up lending. The chancellor also announced a new scheme, dubbed Bounce Back Loans, for micro-businesses that provides 100% state-backed loans of up to £50,000.

“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,” Jones said.

“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.”

RBS (RBS.L) has been the most active CBIL lender, extending £1.4bn-worth of loans to 7,400 businesses.

Lloyds (LLOY.L) has lagged other major banks, approving 3,752 CBILS loans to a value of £500m. Chief executive Antonio Horta-Osorio said on Thursday he expects lending to “accelerate further” but said customers “vastly prefer” working capital support and overdraft extensions to taking on more debt.