Government revamps loan scheme for small businesses

The tweaks to the government’s coronavirus aid package should help small companies

The banks insist they were simply following the Treasury’s orders © Getty

The recent overhaul of the government’s Coronavirus Business Interruption Loan Scheme (CBILS) should help more crisis-stricken small and medium-sized enterprises (SMEs) access support. The CBILS relies on a panel of 40 lenders under the supervision of the British Business Bank. Lenders can offer up to £5m to eligible firms, repayable over terms of up to six years, with the state guaranteeing 80% of each loan if the SME defaults.

But while lenders reported more than 130,000 enquiries from SMEs during the first ten days of the scheme, fewer than 1,000 businesses successfully applied, sparking recriminations. Government officials have criticised banks’ implementation of the scheme; banks say they simply followed the Treasury’s instructions.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.