Government faces complications in developing CBILS successor scheme

Plans for a successor scheme to the government’s business lending support initiative have reportedly been complicated by the prolonged national lockdown and disagreements over issues such as pricing.

The Treasury is developing a permanent taxpayer lending programme to replace the existing schemes –  including the coronavirus business interruption loan scheme (CBILS) – which are due to end on 31 March.

The successor scheme was first announced in September 2020 with a view to a January launch but then in December 2020, the current emergency loan schemes were extended to March 2021.

Read more: Everything we know about the CBILS successor scheme (so far)

According to The Times, loan pricing and security such as personal guarantees have not been agreed yet and some lenders are getting worried that there will not be enough time for preparation.

Nan-bank lenders will likely be forced to charge higher rates than larger banks for the scheme to be viable for them and will likely want personal guarantees to please their wholesale funders.

It is thought the scheme will likely allow personal guarantees to be taken, although with limitations to protect borrowers.

It has been discussed by mainstream lenders that it may be better to postpone the introduction of the successor scheme from the planned April launch to when the economy reopens after the latest lockdown.

Peer2Peer Finance News understands that the government, trade associations, lenders and other stakeholders have been part of discussions on the future design of the new scheme.

Mike Carter, head of platform lending at the 36H Group, has previously said the trade body was working to ensure non-bank lenders play an important role in the successor scheme.

CBILS-accredited peer-to-peer lenders Funding Circle and Assetz Capital have both indicated that they expect to take part in the successor scheme.

The Treasury has been contacted for comment.