Coronavirus: Banks ‘not stepping up to the plate’ in battle to protect business
The London Chamber of Commerce has added its voice to calls for the UK’s banks to do more to help British businesses, saying lenders “are simply not stepping up to the plate” in the battle against coronavirus.
Over the last week there have been major concerns that despite a hefty package of schemes implemented by the government to assist businesses through the disruption, many companies had been unable to access desperately needed cash from banks.
Small business owners have said complained of difficulties trying to access funding through the government’s Coronavirus Business Interruption Loan Scheme (CBILS).
Firms say they have either been unable to get in contact with their lender or had been pushed towards normal commercial loans.
The outcry prompted chancellor Rishi Sunak to revise the scheme in a bid to make it easier for companies to claim the cash.
As of Friday, £90m in emergency loans for 1,000 firms had been approved, the Treasury said, out of a reported 130,000 enquiries.
Writing for Morning Wire, LCC chief executive Richard Burge said: “The front line of banks are massively overburdened and do not have the depth of relationship or decision-making authority that they need for quick action.
“It has become painfully obvious that most lending decisions are being taken on algorithmic assessment of the risk of a business sector rather than the specialist ability of a small business banker to understand an individual company.
“SMEs are being offered loans with outrageous interest rates and demands for security from every possible source (including non-executives).
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“There is a grave suspicion that this sort of behaviour is designed to fail; so the banks can say they did make funds available but it is hardly their fault if they were not taken up”.
Although businesses welcomed Friday’s alterations to the CBILS scheme, there are still concerns over the long-term impact of the arrangements.
The SME Alliance said it was worried that the loans scheme would simply push more debt onto already weakened firms.
In place of the CBILS scheme, the body called for a system of grants or extended overdrafts to help firms survive.
Ian Smith, chief executive of alternative financier 1pm, said that “more urgency” was needed for many of the smallest businesses:
“We are working hard to help our 20,000 customers get through this crisis but we want to do more.
“Like other non-bank lenders, we are well established and well-regulated. We urge the Chancellor to look again and recognise the important role non-bank lenders can play in helping SMEs.”