‘Covid loan scheme will fail the most vulnerable 1/3 of small businesses’

Today our CEO Oliver Prill has called for the Government to take a ‘whatever it takes’ approach to help small businesses or one-third might soon start to fail.

At Tide, we fear many micro, small and medium-sized businesses will have no access to the Government Business Interruption Loan Scheme unless the Government makes use of the whole of the UK’s financial services sector. 

Oliver demands the Loan Scheme is opened up, giving immediate emergency access to all lenders who serve small businesses. 

Deliver faster and smarter

Our CEO has already responded to the measures announced by the Chancellor in the Budget and in the press conference on 17 March.

“These measures are generous and crucial to the survival of our small business sector. However, there are serious problems in the speed and methods of delivery. 

“Today I wrote to John Glen, economic secretary to the Treasury, to state that we believe the Coronavirus Business Interruption Loan Scheme (CBILS), accessible via the British Business Bank, has a worrying lack of reach.”

Use the power of the whole financial services sector

“The British Business Bank has decided to work only with a few banks and lenders already on the Enterprise Finance Guarantee scheme. Most of these lenders have a history of under-serving the credit demands of small businesses.

“To deliver the Scheme, the Government must use the power of the whole financial services sector, from the larger and longer-established banks to modern providers like Tide.”

Take on more of the risk and provide funding

“The British Business Bank will only assume 80% of the risk on these loans. The other 20% will sit with the lender. Asking lenders to assume 20% risk is usually appropriate but at this time of crisis, the credit worthiness of small businesses deteriorates and this could lead to too few businesses being eligible. 

“Furthermore liquidity available to lenders will be reduced in this crisis so the guarantee amount needs to come with funding.”

Act now to save more small businesses

“By opening up the Coronavirus Business Interruption Loan Scheme to all lenders, the Government would be able to support many more small businesses from failing. 

“Small companies are crucial to the UK economy. Immediate emergency access should be given to all SME lenders as a ‘whatever it takes’ measure. Secondly, the scheme needs to be redesigned with the  current urgent situation in mind and with the will to act boldly.”

Have your say

How is the coronavirus affecting you and your small business? We’re keen to hear from you – get in touch with us on LinkedInFacebook or Twitter.

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Suzanne Worthington

Suzanne Worthington

Senior Writer