U.K. government officeholders and companies have chastised financial institutions for requiring personal guarantees for emergency loans that are backed by the state. The mandate puts much of the risk that the loan sours on the owner of the company instead of the institutions, the BBC reported.
Barclays, in one case, has reportedly let clients know that they have to ink personal guarantees to get crisis finance supported by the government. For loans exceeding £100,000, HSBC told the outlet that it will mandate a kind of personal guarantee.
But the Royal Bank of Scotland (RBS) will reportedly provide business disruption loans without the request of company owners for guarantees. Other financial institutions will now reportedly be encouraged by business customers to follow the lead of RBS.
British bar owner Alex Harris said per the report that he put an inquiry into his bank regarding the government COVID-19 loan plan. Harris was presented with another kind of offering. The owner said per the report, “We got offered a financial product of theirs, another loan which is not part of the coronavirus package.”
Harris noted that he was requested to borrow against his residence and wondered about the reason behind the request amid the current uncertain climate. U.K. Finance Chief Executive Stephen Jones recommended that Harris reach out to the British Business Bank (BBB) to seek a different lender.
In separate news, a task force of British B2B FinTechs has been created to make a unified platform through which alternative lenders, private investors and banks can deploy SMB funding. Wiserfunding, Nimbla, Trade Ledger and NorthRow are working together on the solution to speed up the flow of financing for British SMBs to supplement other measures.
Also, Linked Finance, an alternative lending company, put into place the Deferred Start Loan, a new lending product. It provides a repayment plan of 15 months without a requirement for small and medium-sized businesses (SMBs) to make payments over the first three months.