Ablrate chief David Bradley-Ward has branded the £13.7bn channelled through the coronavirus business interruption loan scheme (CBILS) a “disgrace” and blasted banks for not playing their part in supporting struggling firms during the pandemic.
In March, Chancellor Rishi Sunak pledged £330bn in loans to support businesses and the economy during the Covid-19 crisis.
Figures from the Treasury on Wednesday showed 60,409 firms have been granted £13.7bn through CBILS, 1.17 million businesses have received £35.4bn through the bounce back loan scheme and 516 borrowers have accessed £3.5bn through the coronavirus large business interruption loan scheme.
In total the schemes have facilitated £52bn in loans and supported 1.23 million businesses.
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“£13.7bn to over 600,000 businesses is an absolute disgrace,” Bradley-Ward (pictured) said.
“And this is by and large the low hanging fruit. I’ve been saying right from the very beginning that banks are just acting like pirates. I’m quite shocked with the figures from the schemes. I thought about £30bn, £40bn would have been lent under CBILS.
“The chancellor said he was going to inject £330bn into the economy. If this was lent by September we wouldn’t be in this situation, but the banks are refusing to lend on their balance sheet and are just lending bounce back loans with 100 per cent guarantees and I think 50 to 60 per cent of those will default.
“CBILS has an 80 per cent government guarantee and banks are not lending these loans because they’re terrified to put the 20 per cent onto their balance sheets.”
Bradley-Ward believes that the businesses that needed the money would have already applied by now, so the loan volumes for government schemes are unlikely to increase much more.
He said that the chancellor should have forced banks to deliver funds under the schemes through naming and shaming the banks which haven’t lent enough in weekly updates.
“This recession will be 10 times worse because the banks haven’t done their job,” Bradley-Ward said.
“I think the banks have been utterly disgraceful in this period and Rishi Sunak hasn’t delivered the £330bn he promised.
“The economy needed that money shoved into it to avoid the mass unemployment we’re going to get once the furlough scheme ends.”