Mixed views on the future of CBILS
Peer-to-peer lending industry stakeholders have mixed opinions on whether the government should extend the coronavirus business interruption loan scheme (CBILS) beyond its current application deadline of 30 September.
Several P2P platform chiefs have called for an extension to the emergency loan scheme, which provides a government guarantee on 80 per cent of the value of loans delivered by accredited lenders to small- and medium-sized enterprises (SMEs) impacted by Covid-19.
But Peer2Peer Finance News understands that other industry participants are against a straight CBILS extension and would prefer the scheme to be adapted into another one, more akin to the Enterprise Finance Guarantee (EFG).
Last month, the British Business Bank granted accredited lenders until 30 November to consider and process applications they receive by the end of September, although the application deadline itself had not been extended.
Roy Warren, managing director of Folk2Folk, which was accredited to deliver CBILS at the start of July, is one of the P2P executives calling for an extension to the scheme, which he said is likely to happen. “Any extension of the scheme would be a big positive for businesses which are continuing to see the impact of Covid-19,” he said.
“Not least, those businesses which were able to weather the short-term impacts of the pandemic but need funding over the months ahead and are only now deciding they need a CBILS loan to sustain their business during this time.”
Read more: Chancellor rejects proposal for state body to refinance bad loans
It is understood that some industry stakeholders think the calls for a straight CBILS extension are providing unhelpful noise at a time when the government is assessing what to do with the scheme.
It has been suggested that the adaptation of CBILS into a scheme more similar to EFG could be better for the industry and a shrewder political decision for the government at a time when the financial impact of its emergency loan schemes are being scrutinised. A new scheme could take advantage of all the recent accreditations that have brought together the lending industry whilst ensuring the Business Interruption Payment is dropped, which is said to be stopping lenders from doing any core lending at the moment.
Stuart Law, chief executive of Assetz Capital, another CBILS accredited lender, believes the scheme might change its name but will be extended “in some form” into next year.
“There will be plenty of economic trouble to come that businesses will need support to face,” he said. “The government wants to see the full extent of the economic impact and can only do that later in September.”
Trade bodies Innovate Finance and UK Finance are thought to have been working to align the industry on a position going forward regarding the future make-up of the scheme.
The British Business Bank said any extension to the scheme is a matter for government.
A Treasury spokesperson said: “We’ve backed businesses from the start of the outbreak – paying billions in government-backed loans and grants, protecting jobs by paying workers’ wages and deferring billions of pounds in tax.
“But we’ve been clear these schemes are temporary, and it would not be sustainable for them to continue indefinitely.
“Our plan for jobs will ensure we continue to support businesses, including cutting VAT for tourism and hospitality by 15 per cent, a £2bn Kickstart Scheme and investing nearly £9bn in new infrastructure, decarbonisation and maintenance projects.”
