Money

What business says about new 'bounceback' loans for SMEs



UK banks have welcomed the easing of rules around lending which guarantees 100% of smaller loans given to SMEs hit by coronavirus.

Barclays, Danske, HSBC, Lloyds, NatWest, Santander and Virgin Money said the move would allow money to flow through to firms faster.

The 100% guarantee applies to loans of up to £50,000 under the new ‘bounceback’ scheme. The 80% Government guarantee will still apply on loans of up to £5 million under the much criticised CBILS scheme. Chancellor Richi Sunak had pledged to back £330 billion of loans but only a fraction of that amount had been approved by banks.

In a joint statement, the banks and trade body UK Finance, said: “Following the changes to the scheme announced today, lenders will only ask businesses for information and data they might reasonably be able to provide at speed, and we will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability.”

The new rules from the Government mean businesses applying for loans will be able to defer payments for a year, including interest.

Companies who have received bailouts elsewhere from the Government, either through grants from local authorities or tax holidays, will still be able to apply for the new loans.

And those who have already received a payment via the Coronavirus Business Interruption Loan Scheme (CBILS) can transfer the loan to the new bounce back scheme.

The bank bosses added: “The reforms to CBILS announced… provide welcome changes that should enable banks to provide finance to businesses more quickly alongside other forms of support including capital repayment holidays.”

The new loans will also not require any personal guarantees against a business owner’s property or car.

Dame Carolyn Fairbairn, Confederation of British Industry (CBI) director-general, said: “Sole traders, micro-firms and entrepreneurs will now have a simple route to fast finance to stay afloat, without red tape or time-consuming checks.

“Thousands of businesses could be saved by this lifeline. Banks now need to continue their work in overdrive to get the loans flowing faster.”

British Chambers of Commerce director-general Adam Marshall said: “The Chancellor has demonstrated he is listening to the concerns of our business communities and taking steps to get cash to the front line where it is needed.

“This new route for our smallest companies to apply quickly and get a fast decision will be crucial to those who have struggled to get a CBILS loan.”

Andrew McRae, Federation of Small Businesses (FSB) Scotland policy chair, said: “While the coronavirus business interruption loan scheme and the modifications to it have been welcome, there are clearly still issues with how it’s working, or not, for small businesses. They’ve found it too difficult to access and the process too lengthy.

“As we have said from the start of this crisis, speed is of the essence if we are to save many of the perfectly viable businesses who are battling severe cash-flow problems right now.

“This new simple fast-track system, which should be up and running from 9am next Monday, could finally get the money moving into small businesses and help them bridge the finance gap. If it does, it will prove to be a lifeline for those businesses and the jobs they sustain.

“The application turnaround time will be crucial, but we expect the new rules to slash waiting times.  We would also expect all those who have been declined a CBILS loan facility to be offered to reapply via this new system.  Equally, those mid-way through a CBILS application should now be given the option to switch track.”



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