Banks urged to ramp up lending as just 12,000 small firms get loans

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Banks urged to ramp up lending as just 12,000 small firms get crucial loans to survive the coronavirus crisis

By Ruth Sunderland for the Daily Mail

Published: | Updated:

Britain’s banks are under mounting pressure to come clean over what they are doing to help businesses struggling to survive the Covid-19 outbreak.

Thousands of firms are finding it near-impossible to access cash under the Government’s vital Coronavirus Business Interruption Loans Scheme (CBILS).

Chancellor Rishi Sunak, who launched the scheme last month, last night said he was looking at ways to ‘streamline’ and ‘simplify’ the process and ‘strip out bureaucracy’.

Lending block: Chancellor Rishi Sunak said he was looking at ways to ‘streamline’ and ‘simplify’ the Government’s vital Coronavirus Business Interruption Loans Scheme  process

But he dismissed calls to increase the Government’s guarantee on the loans from the current level of 80 per cent to 100 per cent.

‘I’m not persuaded that moving to a 100 per cent guarantee is the right thing to do,’ Sunak said.

‘Some people have made some comparisons with what’s going on in other countries. I think when you look at the totality of what we’re doing it’s more significant in scope and scale than most of those other countries.’ 

Hours earlier Bank of England chief economist Andy Haldane (pictured) said it was an ‘open secret’ that lenders were failing to get money out of the door fast enough.

Firms with a turnover of up to £45million can apply for CBILS loans worth up to £5million.

Some 12,000 loans worth almost £2billion have gone out to these businesses. That is double the 6,000 that had been made by Wednesday last week.

But it is only a fraction of the 35,000 applications that have been made.

And it is a far cry from the £330billion which Sunak envisioned flowing from CBILS and the Bank of England’s separate Covid-19 Corporate Funding Facility for larger businesses. 

Just two banks have agreed to publish their individual lending figures under CBILS, fuelling fears that some are not pulling their weight. 

RBS – Britain’s largest lender to smaller businesses – has handed out the lion’s share of CBILS loans with £936million to 5,600 firms.

As of last Thursday, HSBC had given £279million to 2,026 companies.

Metro’s £10m to customers 

Thousands of bank account holders can expect a windfall as Metro Bank agreed to hand back more than £10million in overdraft fees.

The Competition and Markets Authority (CMA) found that from February 2018 the bank did not properly warn customers that they could face charges when dipping into their unarranged overdrafts.

Metro will return the money, and pay customers 8 per cent interest on the charges, bringing the total amount to around £11.4million.

Lloyds Bank, Barclays and Santander have refused to disclose their data.

The All-Party Parliamentary Group (APPG) on Fair Business Banking has written to the Treasury and the British Business Bank demanding lenders give daily updates on how many applications had been received, how many approved and how many turned down. 

Kevin Hollinrake, the APPG’s co-chairman, said: ‘We are a few days away from this being a total catastrophe for most businesses.

‘We’ve only got days to fix this so updates by week are not good enough.’

And MPs on the Treasury committee want daily progress updates from the banks stating how much they have lent under CBILS, as many businesses have been left hanging in the balance with no money.

The committee has written to UK Finance and the British Business Bank, which is coordinating the CBILS scheme, urging them to push for better disclosure.

Mel Stride MP, chairman of the Treasury committee, said: ‘Many businesses up and down the country are facing a daily struggle for survival.

‘They need these emergency loans urgently, but data published so far shows that it has been taking too long to reach them.’

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