The British Business Bank (BBB) has not ruled out the possibility that some form of the enterprise guarantee scheme (EFG) will replace the coronavirus business interruption loan scheme (CBILS), Peer2Peer Finance News can exclusively reveal.
The BBB said that the EFG was temporarily suspended when CBILS was launched, and the bank used the 11-year old scheme as the basis for CBILS.
However, there were some small changes – for example, the government guarantee was raised from 75 per cent under the EFG scheme, to 80 per cent under CBILS. The criteria was also expanded to include more sectors, and lenders accredited for the EFG were automatically accredited for CBILS. The BBB also replaced its EFG webpage with information on how to apply for CBILS.
“I don’t know if CBILS will be replaced by the EFG,” a spokesperson from the BBB told Peer2Peer Finance News.
“The language is it’s always been temporarily suspended. I imagine there’ll be a guarantee scheme in some form. It’s down to the government and it will make a decision.
“The take up of CBILS has skyrocketed compared to EFG, partly because it had a guarantee of 80 per cent, more than EFG’s 75 per cent guarantee.”
Stuart Law, chief executive of Assetz Capital, which was accredited for CBILS in May, said that CBILS was an improvement on the EFG scheme, as other sectors such as property lending were included. He added that these benefits should be part of an “EFG plus” scheme replacing CBILS.
“The EFG was not practicable, did not work well, was not used that much and did not support everyone,” Law said.
“It morphed into CBILS, using its paperwork, but had amendments and was made more suitable for a crisis.
“Our recommendation to the British Business Bank and the Treasury is not to return to the EFG but to go forward to an EFG plus scheme that takes all the learning and improvement that went into CBILS and turns it into a new and improved version of the EFG.
“We don’t want to lose the benefits that went into CBILS, such as who can borrow and from what industry sectors.
“The government can’t continue to subsidise the first years’ fees and the Treasury will likely close that off soon but it’s important to maintain a government guarantee to keep a high volume of lending.
“This phase of CBILS is probably over soon but the economy still needs support and I’m calling for an EFG plus, which is a working title and a better version of the old EFG.”