Small– and medium-sized enterprise (SME) borrowers have been urged to apply for government-backed emergency loan schemes through Funding Circle, before the schemes end.
The peer-to-peer lending platform, which has received accreditation for both the coronavirus business interruption loan scheme (CBILS) and the bounce back loan scheme (BBLS), has called upon SMEs to act now to secure finance through the schemes before they end.
Applications for CBILS, which delivers 80 per cent government guaranteed loans up to £250,000, is due to end on 30 September, although the British Business Bank has extended the deadline for lenders to consider and process applications received by this date, to 30 November.
Meanwhile, the deadline for applications for the 100 per cent government backed BBLS which provides loans up to £50,000, is scheduled for 4 November.
The government has not yet made any plans to extend either scheme.
Furthermore, applications seem to be slowing down.
According to Treasury figures as of 10 May, during the first week of the BBLS, 268,173 businesses received funds through the scheme while as of 2 April – a week after CBILS was launched – 1,250 loans were approved under the scheme.
By contrast, in the first week of August, 20,000 SMEs were supported by the BBLS and just 600 firms received loans from CBILS.
Read more: What’s happening at Funding Circle?
“If you still haven’t taken advantage of the scheme, but think the finance could help you either now or in the future, it’s worth considering taking out a CBILS loan,” Funding Circle said in a blog on its website.
“The CBIL scheme was designed to help businesses through the pandemic, which means it has better features than most normal loans.
“For instance, the government pays the interest for the first 12 months of the loan, in addition to paying the upfront fee, which means if you can pay the loan back in full within a year, it won’t have cost you a penny.
“However, if you want to borrow less than £50,001, take a look at BBLS. If you’ve already taken out a bounce back loan and want to borrow more with a CBILS loan, you can still apply.
“If you’re then successful, you will need to settle your existing BBLS loan. This is because you can’t hold both loans at any one time.
“You’ll need to ensure that you request enough funds to cover the cost of repaying your bounce back loan, in addition to the extra funds you want to request through CBILS.”
Earlier this month Starling Bank revealed that as of the end of July, it had lent £227.75m to small businesses via Funding Circle, as part of an agreement to fund £300m of CBILS loans through the P2P lending platform.