Ruth raises difficulties with CBILS

Ruth Cadbury MP
House of Commons
London
SW1A 0AA

Dear Alok Sharma MP

I’m writing in regards to the Coronavirus Business Interruption Loan Scheme (CBILS).

I want to start by thanking you and the civil servants across various departments who have been working hard to introduce this scheme. Our SMEs are the lifeblood of our local economy and communities as well as the national economy, so it is vital thatthey receive the support they need during this time.

This is why I have been deeply concerned to hear first-hand about the delays and difficulties that many businesses in my constituency have had in accessing these loans. With urgent cash flow problems and an extremely uncertain business environment it’s vital that businesses can access these loans as soon as possible.

One way to speed up the processing of these loans is to ensure that they are 100% government backed - in contrast to the existing 80%.

If other European countries are able to offer 100% government backed loans, then why can’t the UK? In Switzerland £12.4 billion in 100% Government-backed loans have been handed out to 75,000 businesses. I also understand that other countries such as Germany have changed the original stake in their loans and are now offering loans with 100% government backing.

Another problem that local businesses have raised with me, is around the financial institutions operating these schemes. One of the main concerns raised with me is that businesses are still having to wait weeks to find out if they’re successful.

Whilst I appreciate the unprecedented demand and scale of this scheme, have any steps been taken by your department or the Treasury to increase the speed at which these loans can be approved?

Likewise local businesses have raised a number of issues with me about the terms and availability of these loans.

I understand that local businesses are finding that conditions are being attached to the loans- such as loans only being allowed for pre-approved purposes such as buying additional equipment. Likewise another local business has informed me that the ring-fencing requirements introduced in 2019 which separated retail banking from investment and international banking have meant they have been turned down for a loan.

Another problem is that the size of the loans available does not meet the needs of businesses; with some businesses saying the loans they are offered are too large, whilst others are saying that they can’t access sufficiently large loans. The later problem is especially important for sectors that have been hit particularly hard such as the travel industry.

Has your department taken any steps to increase greater flexibility in both the application and size of CBILS that are available?

I very much hope that we can work constructively to improve the CBILs - I know that my colleague the Shadow Secretary of State for Business, Ed Miliband, has raised this issue in another letter to you.

I look forward to hearing from you and hope that the Government can make improvements to this scheme to ensure that local businesses in my constituency can get the support that they need.

Yours sincerely,

 

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Letter summary
Ruth raises CBILs difficulties with Secretary of State for Business, Energy and Industrial Strategy