Deluge Of SMB Applications Prompts Lenders To Drop Out Of UK Stimulus Program

Lenders Drop Out Of UK Stimulus Program

Already buried in emergency loan applications from small and medium-sized businesses (SMBs), five U.K. lenders have dropped out of the Coronavirus Business Interruption Loan Scheme (CBILS), according to a report in Bloomberg on Wednesday (April 1).

The agency overseeing the scheme – the British Business Bank – said that some lenders wanted to be dropped from the list until they can make their way through the existing applications, a spokeswoman told Bloomberg. CBILS went live on March 23.

The lenders on the approved list are part of a group of 40 financial institutions (FIs) that have been cleared to extend loans that are backed by an 80 percent government guarantee. Smaller banks like Aldermore Bank and Chamber Acorn Fund have asked to be removed from the list.

“Currently we suggest that your usual bank will be in a stronger financial position to assist you,” Chamber Acorn Fund said on its website regarding potential applicants.

Parliament leaders Kevin Hollinrake and Seema Malhotra sent a letter to regulators to make it easier for small companies to access CBILS. “The process is too slow and complex,” they wrote to senior officials at the Financial Conduct Authority (FCA), the Bank of England and the Treasury. “Businesses are desperate for funds now; they cannot wait days or weeks when they have payroll and supplier payment obligations to meet.”

Chris Manson, Newable’s chief executive officer, said it is no small feat that the British Business Bank, in collaboration with the Chancellor of the Exchequer Rishi Sunak, launched CBILS in two weeks.

“That type of scheme would usually take a year,” Manson said. He added that Newable is facing demand that is 10 times higher than usual. Some staffers were taken off other projects to work on the applications.

Digital banks that weren’t part of an earlier funding scheme lack the accreditation necessary to send relief to people affected by the coronavirus.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.