The coronavirus business interruption loan scheme (CBILS) should utilise the bank referral scheme for smaller loan applications, Adam Tavener, chairman of Alternative Business Funding (ABF), has claimed.
The bank referral scheme mandates the nine largest high street banks to refer rejected business borrowers to three funding aggregator platforms, which in turn refer applicants to an array of alternative lenders.
Tavener, who heads up one of these aggregator platforms, argues that banks are not geared up to deal with thousands of applications for £25,000.
Tavener believes that the bank referral scheme is perfect to take on the workload because it was built to help small businesses. Furthermore, the participating lenders have already been vetted.
“If the government is serious about fixing this, it should immediately extend CBILS to a wide range of the funders that are listed on ABF and other platforms because they have all gone through significant due diligence processes from the British Business Bank and the Treasury already,” Tavener said.
“And banks should refer all applicants below £25,000 to designated platforms.
“This is a very fast and good way of getting money to businesses. You’d be able to get emergency loans through one of our platform lenders within a couple of days, not six to eight.
“Because we’re a tech-based business we can handle thousands of applicants at one time.”
Tavener said that as a government approved clearing house, ABF is well placed to direct applicants to the most appropriate lenders.
“It makes sense to pass applicants through a tranche platform like us, so when they go to a lender like Funding Circle, it’s because that it’s the most appropriate lender for that circumstance,” he said.
Tavener said today’s revamp of CBILS is moving in the right direction but won’t address the fact that small businesses are not getting funding quickly enough.
“The prohibition of personal guarantees is great but until there’s a wider panel of largely tech-based lenders able to turn around funding in hours, days or weeks, businesses are still going to be stuck with the same problem,” he said.
“The various measure of support are absolutely critical to stop the damage to such a huge proportion of small- and medium-sized enterprises falling outside of the packages.
“Undoubtedly there will be some damage but we’re an entrepreneurial nation so I think in the long-term things will recover.
“Everything happening now is about making the situation not as worse, so the recovery can be sooner.”