Only one in five UK businesses who have formally applied for government-backed loans have been granted emergency funding during the Covid-19 lockdown, raising concerns that the programme is failing to get money out fast enough to support struggling firms.
Figures released by the banking lobby group UK Finance showed that British banks have nearly doubled the number of business loans for customers impacted by the Covid-19 lockdown in just one week, but critics say the government-backed scheme is still failing get money out fast enough to support struggling firms.
A total of 6,020 loans worth £1.1bn had been issued under the coronavirus business interruption loan scheme (CBILS) as of Tuesday. That is nearly twice the 3,309 issued last week, and marks a 150% rise in the total amount lent to small and medium-sized businesses – worth an additional £700m.
UK Finance said 21% of the 28,460 formal applications had so far been approved for the government-backed loans, which are interest-free for 12 months. However, more than 300,000 firms have reportedly made informal inquiries about seeking help from the scheme, which is part of the government’s wider business support package worth £330bn.
A survey released on Wednesday by the British Chambers of Commerce showed that just 2% of respondents had successfully accessed the CBILS programme this week. While that is double last week’s figure, some businesses said lenders were failing to respond to informal inquiries fast enough, if at all. UK Finance is not releasing data showing which banks are releasing the most loans under the scheme. More than 40 lenders are issuing CBILS loans.