Originally written by Timothy Adler on Small Business
Rishi Sunak will announce an overhaul of the government’s coronavirus small business loans scheme on Friday (April 3) in response to mounting anger.
The government will remove the requirement for small businesses to show that they have no other means of funding before accessing the Coronavirus Business Interruption Loan Scheme (CBILS).
Firms trying to use the coronavirus small business loans scheme say banks have been demanding personal guarantees and quoting double-digit interest rates, driving applicants towards standard business loans.
Small business owners told MailOnline that they are being offered interest rates for between seven and 30 per cent on CBILS emergency loans – despite current UK base rate being 0.1 per cent.
Higher interest rate
Denice Purdie of Kinross-based Kapital Residential told Small Business that Bank of Scotland was advising her to apply for a conventional bank loan at a much higher interest rate. “This is not guaranteed and will take too long,” she said.
Sky News reports that Mr Sunak and his Treasury officials have been in talks with participating lenders, which include the high-street banks.
Although all the big banks have stated that they will not force small business borrowers using the CBILS to put up personal guarantees
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Nearly 1m businesses on brink of collapse, warn accountants
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
UPDATED: More than 800,000 businesses are within weeks of going bust because they can’t get the coronavirus business interruption loan.
Nearly one-fifth of small and medium-sized businesses are unlikely to get the cash they need to survive another month despite promises of unprecedented government support, according to the BBC Today programme.
Many firms have told the BBC that they can’t get the emergency loans or that the money will take weeks to come through.
With bank branches shut, thousands of struggling firms can’t get through by phone or when they do, they are being told they are not eligible.
>See also: How to get the government’s £10,000 cash grant for small businesses
Banks told the BBC they are following government rules on SME lending that firms only qualify the emergency loans if they cannot borrow in a normal commercial way or by taking out a loan against property.
Small business owners have contacted Small Business, saying they are being pushed towards standard commercial loans when they have rung up about the CBIL and that without a CBIL many businesses face collapse.
While grants are promised for the hardest-hit sectors such as retail, leisure and hospitality the group suffering from a
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Banks not cooperating with coronavirus loan, complain small businesses
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Small businesses complain that high-street banks are not entering into the spirit of the government emergency coronavirus loan, pushing them towards expensive products instead.
Entrepreneurs who have contacted Small Business show that banks are either wrongly understanding the Coronavirus Business Interruption Loan Scheme (CBILS) by asking for personal guarantees or are deliberately up-selling it, directing small businesses to take out regular business loans instead.
Alice Douglas, who runs St Curig’s Church bed and breakfast in Snowdonia, North Wales, said that she is faced with £20,000 worth of cancelled bookings because of coronavirus closure. She spent two days trying to get through to her bank, including seven hours of being put on hold, to ask for an overdraft extension. When Douglas – who has been with her bank for 40 years – explained that she needed financial support, her bank asked her if she had another income source over the next few months. When she said no, the bank said it was unable to help.
Douglas said: “I then asked [the bank] about the Coronavirus Business Interruption Loan but they said as I have no income at the moment they can’t do anything. Which defeats the whole
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How do I apply for a Coronavirus Business Interruption Loan?
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
How do I apply for a Coronavirus Business Interruption Loan?
The government has announced a new temporary Coronavirus Business Interruption Loan scheme, as part of a package of measures to help small business.
British Business Bank will deliver the loan scheme, which will launch within the next few weeks to support SMEs to access bank lending and overdrafts.
The government will provide lenders with a guarantee of 80 per cent of each loan – subject to a per-lender cap on the number of bad loans it can claim for.
>See also: Coronavirus government statutory sick pay – how to apply for it
The scheme will support loans of up to £1.2m per small business. This new guarantee, which replaces the existing Enterprise Finance Guarantee (EFG), will initially support up to £1bn of lending.
Like the EFG, the idea is to give lenders more confidence in approving credit decisions for small businesses that have insufficient security to meet the lender’s normal requirements.
However, the Coronavirus Business Interruption Loan will offer more attractive terms for both small business and lenders than the EFG.
Lenders will not charge small businesses or banks for this guarantee.
However, the small business borrower will always remain 100-per-cent liable