The Government’s flagship Covid-19 rescue package for SMEs – the Coronavirus Business Interruption Loan scheme – is under fire once more after a senior minister admitted that 98.6% of businesses that have enquired about the scheme have yet to receive a single penny of help.
The CBIL scheme has been beset with problems virtually since its launch three weeks ago, with industry body the DMA among those which protested to Whitehall after members complained about banks’ demands, especially over personal guarantees.
The Government has since said it will be overhauling the scheme, and among other measures will remove the requirement for personal guarantees for loans under £250,000 and the removal of the requirement to demonstrate businesses have no other means of funding.
Where loan requests are between £250,000 to the £5m cap, the personal guarantees will be limited to 20% of the total loan, as the Government will assume the remaining 80% of the risk, while it has ordered banks to remove the option to offer their own commercial alternatives over the CBIL scheme as the first available option.
However, these changes would seem to be virtually irrelevant for most companies as only 4,200 of the estimated 300,000 firms that sought help online have received funding.
Speaking on the Sophy Ridge on Sunday Sky News show, Business Secretary Alok Sharma admitted progress had been slow. He said: “The latest figure that I have is around 4,200, and just over £800m has gone out.
“I have spent the last couple of days talking directly to some of the largest lenders who are part of this scheme and I have been very clear to say to them that we need to get money out of the door as quickly as possible. They understand that … we have set this up at pace and everyone is literally working around the clock.”
When quizzed whether he was worried about the go-slow, Sharma replied: “Well, of course. It is not just a question of me being worried – I completely understand the concerns that businesses have.”
Last week, the British Chambers of Commerce reported that only 1% of firms responding to its survey had managed to secure a loan under the CBIL scheme, while 7% had received one of the grants offered to small businesses by the Treasury.
According to the Observer, Shadow Business Secretary Ed Miliband has written to Sharma to warn that thousands of companies are on the verge of collapse, and that without increased commitment from the Government, they were likely to go under. He reportedly wrote: “The risks of doing too little, too slowly to help businesses are much greater for the long-term health of the economy than the risks of doing too much, too quickly.”
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