Bounce back loans must be live from Monday, say small firms, as interruption scheme disappoints

  • 30 Apr 2020

Responding to new UK Finance figures which show that 25,262 of the 52,870 small business finance applications made through the Coronavirus Business Interruption Loan Scheme (CBILS) have been processed and approved, with an average value of £165,000, Federation of Small Businesses (FSB) National Chairman Mike Cherry said:

“While the volume of CBILS lending has almost doubled over the last week, the average value of facilities secured through the scheme remains high. This initiative has not worked for the small firms that make-up 99% of our business community: customer service has been poor, the application process has been arduous, and the wait times for decisions have been lengthy.  

 

“Less than half of applications have been processed, and we know that even getting to the application stage can be a nightmare. We don’t even have sight of decline rates or a bank by bank breakdown of how CBILS is progressing.

“The new bounce back scheme offers real hope in this space. We’re several weeks into the lockdown – with many business owners having to pay wages, utility bills and rent with no revenue coming in – so its launch can’t come soon enough.

“It must be live from 9am on Monday as promised – with money in accounts by the end of next week at the latest. Those that have been refused a CBILS facility should be written to with the offer to apply for a bounce back loan, and those mid-way through a CBILS application given the option to change tack. It’s critical that business owners have access to a streamline bounce back application process through any bank where they hold a consumer or corporate account.    

“We have no idea what interest rates will look like on bounce back facilities after the initial fee free 12 month period is up. We need clarity on that front urgently, with a recognition that these are emergency facilities for firms facing unprecedented hardship.  

“In future, we’ll have to assess how the bounce back initiative has impacted market competition. It makes sense for small firms to access these facilities through banks that already know them. However if the vast majority only bank with a handful of players, we’ll have to ensure that the scheme doesn’t stifle efforts to diversify the market, and further entrench a lack of competition.

 

“There’s also a question about capacity here. If the banks are already struggling to process thousands of CBILS applications, how will they manage thousands of bounce back enquiries on top of that?”

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