Coronavirus business loans: Liberal Democrats leader calls for ‘loan marketplace’
The Treasury should create a “loan marketplace” to better facilitate the coronavirus business loan scheme, according to Liberal Democrat leader Ed Davey.
Davey today called for the government to create a website for businesses to browse a wide range of emergency loan options from different banks, similar to websites such as Compare the Market does for insurance.
Davey said the marketplace would “collect the data in one form (see 2 below) and use sophisticated databases to save huge amounts of time – or both businesses and the banks who are under pressure reviewing applications”.
He also called for a standardised application form for all lenders and increase in the amount of banks operating in the scheme.
Currently, there are more than 50 banks that act as approved lenders that are a part of the coronavirus business loan scheme.
The UK banking sector has been criticised for approving emergency loans too slowly and for making it too difficult for some businesses to access.
“With many businesses on the brink of collapse, without the cashflow they need to survive, much faster action is needed to avoid bankruptcies on a record scale,” Davey said.
The Liberal Dem leaders’ call comes as chancellor Rishi Sunak unveiled a new micro loan scheme today.
The “bounce back loans” will be 100 per cent government-backed and will be available to businesses within 24 hours of applying.
Businesses can apply for loans that are 25 per cent of their turnover, up to £50,000.
Sunak said banks will not need to perform any “forward looking tests of businesses viability” and that businesses would need to fill out just a “simple, quick, standard form”.
Businesses will not even need to provide proof of turnover in the application process.
“I know some small businesses are still struggling to access credit – they are in many ways the most exposed to the effects of the coronavirus,” Sunak said.
“They will need extra support to get through this crisis. Some businesses will not want to take on more debt…but for some others loans will be a part of the answer.”
The government’s £330bn coronavirus loan schemes – the coronavirus business loan scheme (CBILS) and the coronavirus large business loan scheme (CLBILS) – have been widely panned since their roll out.
The banking sector has been criticised for the loan approval process taking too long and for it being too restrictive for struggling businesses.
Just over 20,000 loans have been approved in the scheme’s first month.
The Treasury was contacted for comment on Davey’s proposal.