Chancellor urged to look to Switzerland for CBILS improvement
The Chancellor Rishi Sunak should introduce something similar to Switzerland’s emergency scheme for businesses impacted by Covid-19, managed services provider eacs has claimed.
Roger Frye, finance director of eacs, said this is because banks are failing to deliver the coronavirus business interruption loan scheme (CBILS) to small and medium-sized enterprises (SMEs).
The Swiss scheme comprises of two main elements. The first enables businesses to apply for an immediate loan worth up to 10 per cent of their annual revenues, capped at SFr500,000 (£400,000).
This is interest free and provided by the Swiss banks, which are underwritten with a full credit guarantee on the amount by the Swiss government. To apply all you need is a simple declaration.
The second loan facility is up to SFr20m (£16.5m). The Swiss government guarantees 85 per cent of the loan, charged at 0.5 per cent interest. The bank assumes risk of the last 15 per cent, charged at a competitive rate.
Read more: P2P industry urges faster roll-out of Covid-19 loans scheme
“To say that the UK scheme is patchy is an understatement and we are adding our voice to calls for the chancellor to look to Switzerland to see how successful support for SMEs can be,” said Frye.
“As it is run through the existing banking network and its customer relationships, the authorities were able to roll out the scheme almost overnight.
“Barely any new infrastructure was needed, and banks already had the necessary credit history and data on their clients. Why on earth would we not do the same?”
Read more: Use bank referral scheme to speed up emergency SME loans
Frye criticised UK banks for wanting the submission of management accounts, cashflow projections, historic reports and accounts, and even details on assets, making the already complex process more time-consuming.
CBILS is being run through some 40 accredited lenders, however Frye highlighted that according to The Sunday Times, the majority of loans are being facilitated by just two lenders, NatWest and HSBC.
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“The resultant approach being taken by UK banks is less than supportive, in fact one could argue that the risk adverse culture is as strong as ever,” said Frye.
“It is absolutely clear that the current government coronavirus loan scheme needs review.
“We would argue that the government needs to guarantee 100 per cent of the loan, making banks more of a delivery mechanism for grants as opposed to playing the traditional role of credit gatekeeper.
“The SME sector needs support – it is the powerhouse of the UK economy and will be crucial to the economy rebound post-Covid-19.”
