Originally written by Timothy Adler on Small Business
EXCLUSIVE: Most coronavirus emergency business loan applications are still being rejected, despite chancellor Rishi Sunak overhauling the scheme.
Fifty-three per cent of Coronavirus Business Interruption Loan Scheme (CBILS) loan applications have been rejected, according to a survey of Small Business readers – despite the Treasury loosening the scheme on April 3.
Previously, high-street banks were following government guidance that coronavirus emergency business loans should only be offered to small businesses which would not qualify for a commercial loan.
The paradox is that banks were being asked to lend to companies they would normally turn down – and still be on the hook for the 20 per cent of the CBIL the government has not guaranteed.
Banks have long been reluctant to lend to small businesses, with just 2 per cent of lending going to SMEs, as they do not have the security banks look for.
Small Business surveyed 1,823 small businesses, 53 per cent of which said their coronavirus loan application had been rejected since April 3, when the scheme was overhauled.
The SmallBusiness.co.uk survey chimes with business secretary Alok Sharma’s own admission on Sunday that only 4,200 loans worth £800m have been awarded, despite over 300,000 applications.
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