Yesterday the Chancellor, Rishi Sunak, updated the Business Interruption Scheme for the better.
Many of you will have been frustrated if you have been trying to get hold of the governments Coronavirus Business Interruption Loan Scheme (CBILS) from your bank.
The main issues revolved around the fact that businesses could only access the loans if they had been refused a loan on commercial terms, meaning that at best there was a big delay whilst banks assessed whether a traditional loan was available. This of course also meant that if a normal loan was available then the repayment and fee breaks promised under the CBILS were not applicable.
Secondly there was the need for the person applying for the loan to guarantee the 20% of the loan the government didn’t cover. This put a lot of stress on the person applying and led to a lot of businesses, uncertain how long the lockdown would last and what their situation would be like afterwards, deciding against the loan.
These are the two main areas that Sunak covered with the updates, once again showing that he is listening and whilst they might not be getting it 100% right first-time, they are willing to change when needed (even if the speed is not always as we would like).
To put into context how ineffective the CBILS has currently been only £145m in loans have been lent against the government pledge to guarantee £330bn of loans.
The updates include:
You will no longer have to have been refused a loan on commercial terms to be eligible
Banks will be banned from asking company owners to guarantee loans with their own savings or property, this is applicable to loans up to £250K
However, there is no cap on the interest rates banks can charge.
It is worth noting that banks are still going to be overrun with requests and a lot of staff are having to work from home. As a result it is still not going to be a quick fix, but these changes should help speed up the approval process by removing some of the hurdles.