Alternative business lenders have welcomed the announcement of a recovery loan scheme to replace the existing coronavirus support programmes.
Chancellor Rishi Sunak unveiled the successor scheme in his Budget on Wednesday, which will provide loans between £25,000 and £10m to businesses, with 80 per cent of the loan’s value guaranteed by the government.
The scheme, which will be available for the rest of the year, will replace the coronavirus business interruption loan scheme (CBILS), bounce back loan scheme and coronavirus large business interruption loan scheme when they close for applications on 31 March.
Stuart Law, chief executive of CBILS-accredited P2P lender Assetz Capital, welcomed the new scheme and said it should support both the companies that are negatively impacted from coronavirus and also the businesses that have been positively impacted from the virus and need growth funding.
“Companies that are growing need finance but find it difficult to obtain, sometimes they don’t quality for traditional bank loans,” he said.
“We hope the scheme would help them grow as well as the companies that still have difficulties. It’s very important the scheme covers companies with growth potential as many will help us get back to full employment.”
Lisa Jacobs, Europe managing director at Funding Circle, also said the P2P business lender welcomed the new scheme and looks forward to taking part in it.
“We welcome the government’s recovery loan scheme, which will continue to support small- and medium-sized enterprises as we emerge from the pandemic,” she said.
“We look forward to facilitating loans under the new scheme, ensuring small businesses have the finance they need to invest, create jobs and drive the economic recovery.”
Lee Birkett, founder of JustUs, said the scheme will aid businesses and hopes his platform can participate in it but was disappointed with the absence of fintech in the Budget.
“The takes from the Budget are an extension of CBILS rebranded as the recovery loan scheme, an extension of research and development tax credits, an extension of the future fund and help for first-time buyers, all welcomed but nothing new,” he said.
“The recovery loan scheme depends on the eligibility of loans, the devil is in the detail.
“And there was not one mention of fintech so it doesn’t look like we’ll be able to play a part in the delivery of the loan scheme.”
Ravi Anand, managing director of CBILS-accredited alternative lender ThinCats, said the scheme will allow businesses to source the funding they need to take advantage of growth opportunities as lockdown restrictions are lifted.
“The 80 per cent government guarantee provides a lot of comfort to lenders in an environment that remains uncertain, whilst ensuring that each loan is fully assessed by lenders from a credit perspective,” Anand said.
“Due to the large amounts already lent by the banks to businesses through the previous schemes, the banks may have a reduced appetite for the new scheme. This offers a good opportunity for alternative lenders to provide a higher proportion of the overall funding.”