OakNorth joins call for Coronavirus Business Interruption Loan Scheme overhaul

Alternative lender OakNorth Bank has called on the Chancellor of the Exchequer Rishi Sunak to reexamine the Coronavirus Business Interruption Loan Scheme (CBILS) to ensure it can help SMEs survive the current economic downturn.

The criticisms come just a week after it was revealed more than two-thirds of small businesses believe that support from the Government’s CBILS won’t reach them in time.

Similarly, last week the Association of Alternative Business Finance wrote to Chancellor Rishi Sunak calling on the government to open up the scheme to alternative lenders.

Now OakNorth has offered up some amendments to the current scheme which it says will help CBILS have “the desired impact”.

Firstly, the bank has said that loans should be subordinated or ranked beneath any current lending and the maximum term for loans should be increased from six to 10 years.

The UK-based bank also suggested that the Government should take the first losses on the loans to encourage more banks to sign up to the scheme.

OakNorth also proposed that the current turnover limit should be increased from £45m to £200m and the maximum loan amount be increased from £5m to £10m to encompass many medium-sized businesses that don’t meet the current requirements. 

Lastly, OakNorth suggested that SME house-builders and developers of vital buildings such as care homes, hospitals and affordable housing, needed to be included in the CBILS to prevent them from folding as a result of the coronavirus disruption.

Rumours are swirling that all this pressure from SMEs and industry leaders will see the Chancellor overhaul the current scheme in the coming days.

Sky News reported that, possibly as early as Friday, the requirement for banks to assess the eligibility of SMEs for the CBILS will be removed. 

OakNorth says it has applied to join the CBILS as an accredited lender within the next few weeks.