Coronavirus

UK Digital Banks Can’t Disburse Gov’t Funds To COVID-19-Affected Firms

UK, digital banks, Accreditation, funding scheme, coronavirus

Digital banks that weren’t part of an earlier funding scheme lack the accreditation necessary to send relief to people affected by the coronavirus, according to a Thursday (March 26) Reuters report

The British Business Bank (BBB) announced on Monday (March 23) that it was launching the Coronavirus Business Interruption Loan Scheme (CBILS) by remodeling one that was set up in early 2009. The fund had the backing of over 40 accredited banks, including most of the legacy high street banks.

Digital lenders like OakNorth, Tide and Starling wanted to participate in CBILS but have still yet to hear when they can access the money.

CBILS is part of a £330 billion relief solution for companies hit by virus-related expenses and a loss of revenue due to the country’s lockdown.

“It’s important new lenders are on-boarded quickly to deal with the demand. Tide is still yet to receive a response to our registration of interest,” Oliver Prill, Tide chief executive officer, told Reuters. “There is a concern that the BBB is very stretched, and so we urgently call on the government to ensure that it is adequately resourced and that management is setting the right priorities.”

OakNorth Bank, with clients such as restaurant chains and hotel groups, said the government “needed to act fast to prevent small firms from failing.” The hospitality industry was hit particularly hard.

Aside from CBILS and the £330 billion of loan guarantees, the government also is providing as much as £12 billion as a budget stimulus, plus another £20 billion.

“The coronavirus pandemic is a public health emergency. But it is also an economic emergency. We have never, in peacetime, faced an economic fight like this one. But we are well-prepared. We will get through this,” he told the Guardian last week.

The Bank of England (BoE) called off the 2020 stress tests of large banks amid the coronavirus.

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