By Oliver Smith on Tuesday 24 March 2020
Industry calls on the Coronavirus Business Interruption Loan Scheme to be opened up.
As the UK Government launches the Coronavirus Business Interruption Loan Scheme (CBILS), a group of alternative lenders wrote to Chancellor Rishi Sunak this morning calling on the government to open up the scheme to alternative lenders.
Written by the Association of Alternative Business Finance (AABF) and representing the likes of Liberis, Catalyst Finance, Capify, Fleximize and Just Cashflow, the letter calls for its members to be “immediately included”.
“Without access to the Guarantee Scheme, and access to the Liquidity Loan Scheme from Government the new alternative lenders will simply not have the ability to lend, and many may just have to exit the market,” warns AABF chairman John Davies.
“This will not only have a devastating effect on businesses but will also remove much needed competition in the banking sector. I cannot emphasise enough that the Chancellor must act now.”
There are currently only 40 lenders involved in the scheme which lends government-backed loans to businesses, and several warnings have been made that CBILS is "not fit for purpose".
Given the speed at which these policies are being introduced and how reactive the government is being, hopefully it will heed the calls of industry leaders.
“Failure to extend the new Guaranteed Loan Scheme to the very lenders who have backed hundreds of thousands of businesses that the high street banks have rejected will result in the those businesses not now being supported with their urgent cashflow requirements, with the result that many will fail,” adds Davies.
As Tide and Iwoca both warned last week, existing lenders involved in the scheme simply don’t have the coverage to support all the SMEs who will need urgent access to cash in the coming months.
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