LONDON (Reuters) – British banks are dealing with a backlog of more than 20,000 applications for emergency government-backed finance from small businesses struggling due to the coronavirus, three weeks after the scheme was launched, industry figures showed on Wednesday.
FILE PHOTO: Wads of British Pound Sterling banknotes are stacked in piles at the Money Service Austria company’s headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger
UK Finance, a trade body that represents major lenders, said its members had lent 1.115 billion pounds ($1.39 billion) as of April 13, up from 453 million pounds a week earlier.
But since the scheme opened three weeks ago, many businesses have complained it has been slow to provide funds.
A survey from the British Chambers of Commerce earlier on Wednesday showed that just 2% of small businesses said they had received money from the scheme – the first part of part of 330 billion pounds of state lending – while 9% had been rejected or were still waiting for a reply.
UK Finance said its members had worked over the Easter holiday weekend and approved 6,020 loans in total as they work through the 28,460 applications which they have received so far.
“Like all businesses they are working at reduced capacity as many staff are self-isolating or looking after family,” Stephen Jones, the chief executive of UK Finance, said.
The Coronavirus Business Interruption Loan Scheme gives loans of up to 5 million pounds to companies with a turnover of up to 45 million pounds. The government guarantees 80% of the loan, but banks will be on the hook for the remaining 20% if borrowers default.
Finance Minister Rishi Sunak has rejected calls from some business groups and politicians for the government to shoulder 100% of the losses in order to speed up the roll out of loans.
“We’re working with lenders to ensure support reaches those in need as soon as physically possible,” he said on Wednesday.
UK Finance said the average size of the loans it had made was 185,000 pounds.
The Federation of Small Businesses said the process was still too daunting for the smallest firms and a fast-track process for loans under 30,000 pounds needed to work better.
“Many members tell us it’s difficult to get to the formal application stage – banks are still slow to respond to CBILS enquiries. Even if you do get your forms through, the process is very demanding for the uninitiated,” FSB Chairman Mike Cherry said.