Peer-to-peer lending platforms have called on the government to extend the coronavirus business interruption loan scheme (CBILS) past its deadline of 30 September.
So far CBILS, which has an 80 per cent government guarantee and provides loans up to £5m, has delivered £11.5bn to 53,500 small- and medium-sized enterprises.
David Bradley-Ward, chief executive of asset-backed P2P lending platform Ablrate, said that CBILS will most likely be extended because the current economic situation will not be sorted soon, but he added that most businesses that have needed to utilise the scheme would have applied for it by now.
“It would make sense to extend it if there’s a second wave and another lockdown in the winter, but how would it work, would businesses that have received CBILS already and need it again, take out another CBILS loan or top theirs up?” he said.
“I can see them extending it for the rest of the year, but we don’t know what the unintended consequences will be. CBILS is already skewing the lending marketplace.”
Stuart Law, chief executive of Assetz Capital, said the government needs to extend the scheme in order for lenders to attract the institutional investment needed to deliver these funds.
“No more institutional investors will be coming to the table for any alternative lenders unless the government extends the scheme,” he said.
“It would be great even if they could just confirm the scheme is moving forward.
“I think the government wants to make an announcement but wants to see what the economic situation is like in September first, which makes sense in one way, but it’s really badly harming the chances of alternative lenders taking part in the scheme.”
Lee Birkett, founder of JustUs, said CBILS should be extended for another 12 months at least, and should also be amended.
“The government should add a 100 per cent guarantee up to £250,000,” he said.
“It should also create a larger scheme, like the future fund, for growing businesses that are not currently able to access equity.”
Andrew Holgate, chief executive of fintech consultancy Equitivo, said CBILS should be extended until early Spring or Summer next year, because it’ll take that long for normality to return.
“I think support will have to continue because of what will happen in the retail sector and that will have a knock-on effect in the supply chain,” he said.
“Support will still be needed because we’re a long way away from normality.”