Banks are pressuring borrowers to payback coronavirus business interruption loans (CBILS) early, it has been claimed.
Richard Churchill a business advisory partner at Blick Rothenberg has said that banks are asking borrowers to repay loans earlier than necessary despite 80 per cent being guaranteed by the government.
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“The banks are changing their attitude to loans and in many cases are requesting that firms pay back some or all of the loans, earlier than planned,” Churchill said.
“This is extremely worrying especially as the government-backed scheme guarantees the bank 80 per cent of the loan they are making, and their risk is much lower than it would normally be.
“The banks are putting businesses under pressure they do not need, which is going to be extremely damaging to UK businesses that have changed business models and produced forecasts going forward on the basis of their existing funding.
“Clearly when a business needed borrowing to survive, it is not able to repay significant elements of this only a few months later.”
Churchill said banks need to be reminded of their responsibilities to support businesses and added that a more practical step to help solve the issue of affordability assessment would be for the loans to be able to be extended over a longer period, therefore reducing the annual repayments for borrowers.