Why more work is needed to make emergency loans a success

Responding to UK Finance figures which showed that 6,016 of the 28,461 small business finance applications made through the Coronavirus Business Interruption Loan Scheme (CBILS) have been successful over the last week, the FSB warned there was still a lot of work to do.

The CBILS sees the state underwrite 80 per cent of the risk of individual bank loans of up to £5m.

Mike Cherry, FSB national chairman, said: “This improvement marks a starting point, but while one in five formal CBILS applications are approved, the major banks claim their approval rates for standard commercial loans are many times higher than that. These loans are state-backed, so approvals should be higher still.”

He added: “Many members tell us it’s difficult to get to the formal application stage.”

Mr Cherry called for simplification. “Banks should look at pre-filling forms based on data they already have on customers, and we shouldn’t have behind the scenes reporting requirements holding up approvals,” he said.

He welcomed the weekly updates but said they lacked detail about the number of enquiries, the number that drop out at the application stage and what happens to those who are rejected.

“We need to see this data bank by bank so small businesses know which providers are embracing the scheme and which are not,” he said.

He added: “The question of support for early stage, loss making start-ups remains a pressing one. The list of businesses that spent their early years in the red only to go on and be great successes is as long as your arm. They must not be abandoned.”