Peer-to-peer lenders are calling for further improvements to the coronavirus business interruption loan scheme (CBILS), as it emerged that just 6,020 loans have been made to date.
Fresh data from UK Finance revealed that lenders have received 28,460 formal applications to the scheme from businesses, of which just 6,020 have been approved, totalling £1.15bn.
The government-backed emergency loans are being channelled through the British Business Bank to accredited lenders. But the state-owned development bank has come under fire for the slow pace of approvals.
Yesterday the British Business Bank approved four new lenders to deliver CBILS, but has yet to accept any P2P platforms for the scheme.
“The British Business Bank really needs to get their act together and start making the scheme more dynamic, ensuring the money gets to these companies as fast as possible,” said Nicola Horlick, chief executive of Money&Co.
“The government needs to be faster approving lenders like us, we’re very keen to help, as are other platforms I imagine. We talk to small businesses and can act much faster than banks.”
David Bradley-Ward, chief executive of Ablrate, criticised banks for not helping businesses fast enough.
“A lot of viable businesses will be in trouble,” he said.
“You can’t have all these high-growth businesses disappear. It doesn’t make sense.
“If people are not getting responses to apparitions for two or three weeks, there needs to be pressure put onto the banks to do it.”
Stuart Law, chief executive of Assetz Capital, agreed that there was a need to open out the scheme to more lenders but heralded the efforts of the British Business Bank.
“P2P lenders, marketplace lenders and debt funds have different structures to banks, but we are confident that the British Business Bank is working around the clock, day and night, to enable more banks and specialist lenders, such as ourselves, to deliver loans under the CBILS guarantee scheme,” he said.
“We have been communicating with the British Business Bank and other government bodies for some time, and we would hope to see some larger P2P lenders and other non-bank lenders be able to access the scheme as soon as possible.”
Adam Tavener, chairman of business finance aggregator platform Alternative Business Funding (ABF), has previously suggested CBILS should utilise the bank referral scheme for smaller loan applications. He has also suggested that although the value and volume of loans approved is rising, the scheme needs to reach more businesses.
“The number of businesses money has been lent to is still in the thousands, not yet the hundreds of thousands,” he said.
Mike Cherry, national chairman of the Federation of Small Businesses, criticised banks for their slow responses to applications and called for improvements such as more help for start-ups.
“If volumes don’t improve then all options should be kept on the table, including an upping of the 80 per cent guarantee,” he said.
“Other European nations like Germany have already opted for the 100 per cent 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.”
CBILS got off to a shaky start, as high street banks demanded personal guarantees (PG) from business owners applying for funding. While that requisite has since been removed, PG insurance provider Purbeck Insurance Services has warned that those who already have a PG-backed loan may be at a disadvantage when applying for CBILS.
Furthermore, small business owners appear reticent to add another loan to their debt burden, Purbeck Insurance Services said.
“While just 15 per cent of small business owners with PG insurance in place are showing signs of severe financial distress, the broader small business community is suffering,” said Todd Davison, MD of Purbeck Insurance Services.
“Reports suggest however, that the number of businesses securing funds through the CBILS is at a low level. Our customers are fearful of committing to more debt when they have existing loans to honour. We are advising them to contact existing lenders and landlords to discuss a payment holiday but a wider initiative to offer small businesses a three month loan moratorium would help ease the financial burden at this crucial time.”