Originally written by Timothy Adler on Small Business
Nearly two thirds of Bounce Back Loans, designed to help small businesses survive Covid-19, may never be repaid, says the government.
The business department in its latest set of accounts says that up to 60 per cent of Bounce Back Loans, hurriedly introduced in July, could go bad.
If so, that could mean the taxpayer having to find over £20bn to cover small business loans which have defaulted.
>See also: Small businesses have average of just £9,000 left from Bounce Back Loan
The Bounce Back Loan Scheme (BBLS) provides private sector lenders with a 100-per-cent state guarantee on low-interest loans to small companies. It has underwritten £38bn of credit to 1.3 million companies to date.
Overall, the taxpayer faces losses of as much as £23bn so far in bad loans across all the state coronavirus emergency bailout schemes.
Vulnerable to abuse
Yesterday, it emerged that ex-British Business Bank (BBB) CEO Keith Morgan wrote to business secretary Alok Sharma in May, warning that the schemes risked wasting taxpayers money.
Mr Morgan said: “The scheme is vulnerable to abuse by individuals and by participants in organised crime.”
A draft review by PwC had classified the risk of fraud as “very high”, he added.
The BBB, which
Tag Archive for British Business Bank
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Why Britain’s SMEs need a proper small business bank
by Greg Taylor • • 0 Comments
Originally written by Greg Taylor on Small Business
The UK banking system is currently failing small businesses.
In theory we do have a solution, the British Business Bank (BBB), but it’s not fit for purpose and isn’t even a real bank – just a platform for connecting lenders to SMEs. As we look to reboot the UK economy, the government needs to take radical action to ensure small businesses aren’t denied funding by a banking system which doesn’t work for them.
At present SMEs looking for funding face a perfect storm. Blanket credit policies from the banks, the fact that some SMEs are overleveraged due to the CBILS borrowing they needed to survive the pandemic, issues with liquidity within many alternative peer-to-peer lenders, and the banks’ current lack of lending appetite, have all combined to make present circumstances very tough for SMEs. They need help urgently and the best solution would be to establish a new government-backed bank to rival the main high street and investment banks and to replace the British Business Bank.
>See also: British Business Bank increases small business support by over a quarter in the past year
The British Business Bank doesn’t perform a banking role but simply helps introduce other
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Fintechs giving up on joining coronavirus emergency loan scheme
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Fintechs are giving up on ever being recruited to join the government’s emergency coronavirus bailout scheme for small businesses, despite being eager to do so.
The British Business Bank, which administers the Coronavirus Business Interruption Scheme (CBILS), has added four more lenders to the scheme – Allied Irish Bank, ThinCats, Paragon Bank and IGF – to join 48 existing accredited lenders.
However, just three of those which have joined the coronavirus loan scheme – Funding Circle, OakNorth and Starling Bank – are the kind of fintechs which have shaken up business lending.
British Business Bank says that 80 per cent of Britain’s small business have a relationship with one of the CBILS 52 accredited lenders, and that it is speeding up onboarding of new lenders to further extend the scheme’s reach.
>See also: What is the British Business Bank? – a Growth Business guide
But, according to the Telegraph, 100 other lenders are champing at the bit to join the BBB’s accreditation process and some are losing hope.
This is despite 60 per cent of small businesses saying they will run out of cash within 12 weeks, according to the Association of Accounting Practitioners.
Oliver Prill, chief executive of fintech
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Government launches Business Finance Council to help small businesses
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Government has established a Business Finance Council to help small businesses access funding once the UK has left the European Union.
Business secretary Andrea Leadsom will co-chair the council with economic secretary John Glen, which will be made up of representatives from high-street banks and alternative lenders.
The council will identify and help overcome any barriers faced by small and medium-sized businesses in securing the finance they need, particularly working capital and investment.
Leadsom said: “Our new Business Finance Council will bring together key players, ensuring that finance continues to flow to our brilliant businesses so they can do just that.”
Glen added: “It’s vital that businesses engage with their lenders ahead of Brexit and the new Business Finance Council will ensure government, banks and other lenders work together to help SMEs access the finance they need.”
Michael Gove, the minister in charge of no-deal preparations and small business minister Kelly Tolhurst were also present at the meeting on Thursday.
Banks and alternative lenders summoned to the Cabinet Office included Barclays, Bibby Financial Services, British Business Bank, Close Brothers, CYBG/Virgin Money, Funding Circle, HSBC, Lloyds, Metro Bank, RBS, Santander, Secure Trust Bank, Shawbrook, TSB and UK Finance.
“The mood
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British Business Bank increases small business support by 27pc
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
British Business Bank, the Government economic development bank, increased support for start-ups and smaller businesses by over a quarter in the past year.
It has supported over 89,000 businesses in the UK with £6.6bn of finance in 2018-19, an increase of 27pc from £5.2bn the previous year, according to its annual report.
Over 90pc of the finance was delivered through smaller, newer or alternative finance providers. The bank announced 13 new delivery partners across its programmes during this period, lifting the total number of providers it works with to more than 130.
Almost half of the £6.6bn involved providing capital to SME lenders, a third consisted of equity placed with venture capital fuinds, and the rest spent by the BBB guaranteeing borrowing by businesses.
Indeed, the BBB has become one of the largest investors in venture capital funds. Unicorn companies that the BBB has backed through VCs include Revolut, Graphcore and TransferWise.
Meanwhile, the bank’s regional development funds, aimed at levelling the playing field for access to finance, now support more than £240m of funding.
The bank made a pre-tax profit of £81.3m over the period.
Lord Smith of Kelvin, chairman of the British Business Bank, said: “Smaller businesses are
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Small businesses receive a record £6.7bn in equity funding
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Small businesses received a record £6.7bn in equity funding in 2018, a 5pc increase year on year.
The average deal size was £4.5m, an 11pc increase compared with 2013.
The UK’s white-hot tech sector received 44pc of small business equity funding. Backing for tech businesses increased by 24pc in 2018 with £3bn invested, the highest amount to date.
Small business equity funding outside London increased by 29pc as the capital’s influence as an SME hub waned. The East of England, North East and West Midlands were the three regions driving this regional uptick, where equity finance investment deal sizes grew by 118pc, 115pc and 81pc respectively.
Several UK regions also saw a significant increase in the overall number of deals – up by 65pc in the North East, 15pc in Yorkshire and Humber and 11pc in Wales.
Keith Morgan, CEO of British Business Bank, said: “We are particularly pleased to see a 29pc increase in investment outside of London. The British Business Bank continues to work to address regional imbalances in access to investment to ensure smaller businesses across the UK can access the equity finance they need to fulfil their growth potential.”
Indeed, the UK venture capital sector
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Government launches scheme to help fund small builders
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Small builders are set for a boost as the government launches a scheme to fund home building developments.
The state-owned British Business Bank will make up to £1bn of guarantees available to banks that that lend to small builders. This will reduce the amount of capital these banks are required to hold against such small builder finance, encouraging additional lending to smaller developers.
The chancellor pledges to help small and medium-sized builders in last autumn’s budget in an effort to hit the 300,000 new homes every year.
The BBB has struck deals with specialist lenders to help with small builder finance, but this is the first time a dedicated scheme has been set up for the industry.
ENABLE Build is a new variant of the BBB’s existing ENABLE guarantee programme, which takes on a portion of the lender’s risk on a portfolio of loans to smaller businesses, in return for a fee.
The scheme is open to applications from banks where at least 80pc of the loans are to developments in England. (Housing policy in Scotland, Wales and Northern Ireland is developed to their governments.)
The proportion of homes put up by small builders has halved since the late
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Thousands of small businesses just got a better chance of getting funded
by Michael Somerville • • 0 Comments
As small businesses continue to apply for fewer loans through high street banks, alternative lenders are having their moment. That’s because the British Business Bank (BBB) has now extended their existing partnership with alternative loans platform Funding Circle and has committed up to £150 million in new lending for UK small businesses. The transaction is made
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