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CBILS approvals by banks remain below 50%

Posted 7 months ago

CBILS approvals by banks remain below 50%
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Banks continue to approve fewer than half of applications for the Coronavirus Business Interruption Loan Scheme (CBILS), as total lending reached more than £4.1bn under the scheme this week.

UK Finance said lenders have received 52,807 completed CBILS applications so far, 25,262 of which have been approved to date.

This figure includes rejections, applications that are still being processed and those that businesses may not take, but it suggests an approval rate of 47.8 percent so far.

This figure comes as last week despite 36,000 completed applications having been received, only 16,624 had been approved between the launch of the scheme at the start of the month up to April 21 which equates to just 46.1% of loans getting to small businesses.



However, the number of informal inquiries could be as high as 300,000 and growing with many businesses reporting not being able to qualify after speaking to an advisor/bank manager. And also many businesses have not even applied because they know they will not fit the criteria, which means the government will not be able to underwrite hundreds of billions of pounds worth of loans that they have committed to securing.

UK Finance said £1.33bn of loans were approved in the week from 21 April to 28 April 2020,  while the number of loans provided through the scheme increased by 8,638 during that period. 

“The banking and finance sector recognises the role we must play in getting the country through these tough times, and staff are working incredibly hard to get money to those viable businesses that need it,” Stephen Jones, chief executive of UK Finance, said.

 

It comes as peer-to-peer (P2P) lenders such as Folk2Folk and Assetz Capital continue to await the outcome of applications to be CBILS-approved lenders.

Only Funding Circle has been approved so far among P2P platforms, although former P2P lender ThinCats was accredited earlier this week.

 

Responding to the news, CEO of NextFin, Sacha Bright said: “This is yet again another example of why the banks should not be the only providers of CBILS.

The UK government should follow the lead of other countries by introducing simple schemes like we’ve seen in Switzerland, where loans have been provided within 24 hours to SMEs using a one-page application form. Indeed, unlike the legacy systems used by banks, fintech, for example, have the speed and technology to deploy capital quickly.

“With the UK economy fighting to survive and its SMEs bearing the brunt of the downturn, it’s time for the government and the BBB to turn its pledges into real action and back the fintech sector to help our businesses get to the other side of this crisis.

“A 50% approval rate is good. However, as reported above, many business owners know that they will not qualify. And the government is way short of its commitment to support businesses with billions of pounds of loans.

“It will be interesting to see how the new Bounce Back Loan Scheme which is 100% guaranteed will fare. I believe we still need more lenders, especially P2P to be approved to issue CBILS and BBLS to get it to businesses fast, and the government needs to commit support to these lenders for the collection of the loans, as many will default.”

Author: Sacha Bright & Oliver Murphy 

Disclaimer

To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed.

Tagged: News CBILS Covid-19 Funding Circle Assetz Capital Folk2Folk P2P



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