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Government’s new guidance on CBILS loans will still not be enough to save UK SMEs

Our CEO, Richard Pepler, says the new rules announced by the government today (3 April) will still not help businesses access vital funds they need now:

“By the end of this month thousands of businesses could go to the wall as they run out of cash. They won’t be able to pay their monthly overheads like rent and rates and staff salaries. Even if they have furloughed staff, they will still need to pay until the government scheme is set up.

“The new rules will mean business owners need to provide evidence of previous business viability through their accounts, demonstrate they have sufficient security and undergo company and personal credit checks.

CBILS won’t help majority of SMEs

“To date the treasury has received 130,000 applications and only 1,000 have been approved (0.76% of businesses).

“Under the terms of the CBILS scheme, a business can only access the funding for loans of less than £250,000 if it can provide security of 20%. This cannot be a personal cash or primary residence guarantee. Consequently, it’s virtually impossible for a small business to apply in practice, as business owners cannot use the only security easily available to them to guarantee 20%.

“All of the businesses that I have spoken to so far have failed at this hurdle. They simply do not have the business assets available to provide this guarantee. It does not mean they are unsuccessful firms and it definitely does not mean they should be abandoned during this time.

“British Business Bank has been tasked by the government to run the scheme through UK banks. It is advising lenders on the criteria check needed before loans can be approved. However, banks are still able to charge whatever interest rate they choose after the initial interest free period despite interest rates being at an all-time low.

“The intention with the loans was to enable businesses to access cash – fast. And this still won’t happen with the new rules – this is a ticking time bomb for the UK economy.

“We are calling for the treasury to fundamentally rewrite this scheme and not try and put a sticking plaster over a botched idea. Time is of the essence. The government should be engaging with a range of lending firms. For example, in my industry – invoice finance, we are working hard to get cash released based on companies’ sales ledgers in days not months.

“We’ve already saved several businesses which have failed to be approved for CBILS loan but we are just one firm and this problem is not going to go away.”

Our Campaign

We are spearheading a ‘SaveOurSMEs’ campaign and joining forces with a network of commercial finance brokers to support business owners in accessing funds faster. The campaign will include the launch of a new web app designed to provide SMEs with an offer in 90 seconds and funds into their account within days through our instant offers app:

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