Small businesses flood British banks with coronavirus loan requests | Business

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Small businesses rushed to ask for a new government-backed loan program, prompting a lender to warn that banks may be having trouble keeping up with demand.

The bounce-back program was launched at 8:30 a.m. on Monday and had received 79,500 requests in the afternoon, already exceeding 52,807 requests for the Coronavirus Interrupt Activity Loan System (CBILS), which has started March 23.

According to the latest figures available, Lloyds had received 17,000 bounce loan requests by noon, 22,000 RBS by 2:30 p.m. and 34,500 HSBC by 4 p.m. Barclays was the only lender to confirm the number of approvals it made for 100% government guaranteed loans totaling £ 6,000 worth £ 200 million in the middle of the year. midday.

The accelerated program offers loans worth up to £ 50,000 to the smallest UK businesses, who can register via a simple online form. All banks offer loans at an interest rate of 2.5% which occurs after the first 12 month period, without interest or payment.

Anne Boden, managing director of digital lender Starling Bank, who applied to be a BBLS lender, told members of the Select Treasury Committee that there would be concerns about how quickly banks could increase their loans to respond on demand. The initial lending system for companies hit by the deadlock, CBILS, has been criticized for the slow processing of applications.

Under CBILS, lenders must manually send the data to the British Business Bank – the state-supported institution administering the program – to process loans repaid by the government. Boden said the method was “not sustainable.” The BBB is currently working on a new digital platform to speed up the process, but it won’t be ready for another six to seven weeks.

“My biggest concern at the moment is that the processes within all the banks will not take the pressure of what’s going on to process all of these loans and bounce back as quickly,” said Boden. “I think there is going to be a problem of scale here. “

Starling only started lending on Monday as part of the government-backed CBILS program, although there had been weeks before a BBB registration request.

Lenders accredited for the rebound program told the committee that there was a barrage of claims Monday morning.

“We saw applications at a rate of around 35 per minute,” said Matt Hammerstein, director of the British bank Barclays, to MEPs. “So I think there will be an extraordinary demand, recognizing the seriousness and the magnitude of the impact of this [Covid-19] small business crisis. “

The head of the Royal Bank of Scotland’s commercial bank, Paul Thwaite, said the staff had worked “incredibly hard” to set up the rebound loan program on Monday morning and had doubled the call center staff to over 500 to meet demand.

But MEPs asked if banking systems would be able to cope with the surge in demand, including those linked to the British Business Bank.

Barclays customers would have difficulty accessing the applications on the bank’s website. Hammerstein denied that the site was unable to cope, and said that the Barclays technical team was increasing the number of applications that the online site could process at any time.

British lenders have been accused of failing to distribute the funds quickly enough through existing government programs. The latest figures show that they approved less than 50% of the 52,807 CBILS loan applications.

David Oldfield, chief of commercial banking at the Lloyds Banking Group, told MEPs that his team was also struggling to manage the loan processing systems associated with BBB. These systems were originally built for another government program known as the Corporate Finance Guarantee, which was not designed to cope with such an increase in demand.

“I will be the first to say that we have had a slow start,” said Oldfield. “We absolutely faced these operational challenges … it’s a fairly cumbersome and time-consuming process.”

The chairman of the select treasury committee, Conservative MP Mel Stride, warned that he would call attention to “slowing” banks.

He added: “When we are at the end of this extraordinary and terrible crisis, the banks will be at the center of this story in terms of how the economy has coped and how successful we have all been, so I do not ‘I don’t need to remind you of the absolutely essential role you are playing now in this crisis. “

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