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CBILS extension: What do fintechs think?

The chancellor has extended all loan schemes and is already planning a successor programme starting in January.

a man in a suit holding a bottle of wine in a room with chairs and tables

Rishi Sunak/HM Treasury

Yesterday, Chancellor of the Exchequer Rishi Sunak laid out his Winter Economy Plan, which included extending the government loan schemes that have been helping SMEs stay afloat throughout the coronavirus pandemic. 

Back when the government first announced its financial aid package to help SMEs in March, it was first met with a sense of exasperation as it appeared fintechs and alternative lenders had been ignored. 

Fintechs were initially excluded from the loan schemes as only companies that had turned a profit could apply, something even the largest fintechs are yet to do, and alternative lenders didn’t become accredited lenders until a few weeks into the schemes. 

Since then, alternative lenders and banks have dished out over $57bn in government-backed Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Bounce Back Loans and £720m has been given out from the fintech-friendly Future Fund convertible loan scheme. 

In his address yesterday, Sunak announced that he is extending the repayment period for Bounce Back Loans from six to ten years and CBILS for up to ten years, dramatically reducing the average monthly repayment to help struggling businesses. 

Sunak said: “More than 60,000 small to medium-sized businesses have taken out CBILS. To help them, I will extend the government guarantee on these loans for up to 10 years, making it easier for lenders to give more people more time to repay.” 

These measures are part of the new ‘Pay As you Grow’ scheme that will allow SMEs using government loan schemes to make interest-only payments or stop repayments completely for up to six months, without affecting their credit rating. 

Lisa Jacobs, managing director of Europe at Funding Circle, said: “By extending CBILS today, Government is providing small businesses with much-needed support during an acute phase of the pandemic. As we look to the future, we welcome the new announcement of a successor loan programme - so SMEs can go on to invest, create jobs and drive the economic recovery.” 

As well as the new measures, the government has extended the deadline on all loan schemes until the end of November, with most due to close at the end of this month, and also begin drawing up plans for a successor scheme starting in January. 

Ravi Anand, managing director of ThinCats, said: “These are welcome changes to the government loan schemes as the Chancellor has listened to what lenders have been requesting. The extension of the application deadline, although modest, will enable more businesses to access funding.” 

Despite the positive reaction, some industry leaders feel the CBILS extension, while necessary, is still a short-term solution to a long-term problem. 

Charlotte Crosswell, CEO of Innovate Finance, said: “While the CBILS extension is a crucial step, it is only a short-term measure. We have consistently advocated for a long-term solution for SME financing and are therefore encouraged by the announcement that the Chancellor will introduce a new, sustainable scheme from January onwards.” 

It remains to be seen whether or not the government loan programmes will be enough to keep the nation’s small and medium-sized businesses afloat, but we can only hope that the $57bn given out so far fend off the looming crisis for now. 

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