Accountancy and advisory group MHA MacIntyre Hudson has criticised the British Business Bank (BBB) as being “not fit for purpose”, after it found that many eligible businesses were unable to access funding under the government’s coronavirus business interruption loan scheme (CBILS).
Greg Taylor, head of financial solutions at MHA MacIntyre Hudson, cited data from the Treasury showing that 122,885 small– and medium-sized enterprises (SMEs) have accessed £13.7bn through the scheme which ends on 30 September, out of a potential field of nearly 790,000 eligible businesses.
Taylor said that the credit criteria used by lenders for CBILS has been quite conservative, leaving many SMEs unable to find the working capital to fully open.
Read more: Mixed views on the future of CBILS
“The BBB is not fit for purpose and isn’t even a real bank – just a platform for connecting lenders to SMEs,” he said.
“We need a bank prepared to back deserving companies over the long term and that is free from ordinary shareholders with vested interests.
“The government could invest in a new bank directly, or, if funds are to be raised from private investors, they should be in the form of bonds or other instruments that insulate the bank from short-term pressures.
“Staff should have expertise in specific business sectors, so they have the confidence to make a judgement call about a company’s prospects for long-term success.”
Taylor added that the government must act creatively to ensure there is strong liquidity within the finance sector to unlock lending for good SMEs.
He said the government should start by reactivating its contingent term repo facility (CTRF), which was originally activated in late March 2020 and ran for three months.
“CTRF is an unlimited and cheap source of funding for commercial banks that desperately need cash,” Taylor said.
“It is time to open it again but this time the government should broaden its remit to include other lenders like fintechs and challenger banks.”
“The British Business Bank is the UK’s national economic development bank and exists to make finance markets work better for smaller businesses across the UK so they can prosper and grow,” said a spokesperson from the British Business Bank.
“The British Business Bank programmes were supporting more than £7.7bn of finance to over 94,900 smaller businesses at end of December 2019.
“Since March 2020, the British Business Bank has launched four new coronavirus business loan schemes, delivering almost £53bn of loans and guarantees to 1.2 billion businesses.”