Originally written by Timothy Adler on Small Business
Small businesses are struggling to get loans through the Recovery Loan Scheme launched earlier this month to replace emergency schemes such as Bounce Back Loans, according to the Federation of Small Businesses (FSB).
Banks blame tougher credit checks and higher interest rates for the sluggish take-up.
Craig Beaumont, chief of external affairs at the FSB, told the Sunday Times that “the government should be throwing everything it’s got at getting businesses across this ‘unlock’ phase and into the recovery, to avoid businesses falling at the final hurdle because of lack of cashflow”.
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Applications were in the “low thousands” in the first week, according to the Financial Times, with fewer again accepted as potential borrowers. Many of these applicants were existing users of government coronavirus loan schemes, the newspaper reported.
According to the FT, one of the largest UK banks received fewer than 500 applications in the first two days after the scheme went live on April 7. This same bank approved close to 2,000 applications in the same period when the Bounce Back Scheme opened last year.
Recovery Loan Scheme application rules are much more stringent