He claims that without access to the Coronavirus Business Interruption Loan Scheme (CBILS) — which was announced by the chancellor of the exchequer Rishi Sunak during the 2020 budget — many new alternative lenders may have to “exit the market”.
For smaller businesses across the UK which are experiencing lost or deferred revenues, the government will provide facilities of up to £5m.
CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance.
The scheme offers lenders a government-backed 80% partial guarantee against the outstanding facility balance, subject to an overall cap per lender.
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“I have written to the chancellor, the business secretary and the chief executive of the British Business Bank to draw to their attention that failure to extend the new guaranteed loan scheme to the very lenders who have backed hundreds of thousands of businesses that the high street banks have rejected will result in the those businesses not now being supported with their urgent cashflow requirements, with the result that many will fail,” said John.
“Without access to the guarantee scheme… the new alternative lenders will simply not have the ability to lend and many may just have to exit the market.
“This will not only have a devastating effect on businesses, but will also remove much needed competition in the banking sector.”
John added that he couldn’t emphasise enough that the chancellor “must act now”.
“A ‘review in due course’ is simply not an option.”