Chancellor Rishi Sunak is reportedly set to announce an overhaul to the SME loan scheme that will allow companies to access help quicker.
According to Sky News, Sunak and members of the Treasury were reportedly in talks with major lenders, including Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland, to remove the requirement of having banks assess whether SMEs are eligible for other lending options.
The idea behind this is to speed up the process within banks so SMEs can access the loans, of up to £5m, in time.
The British Business Bank (BBB) opened applications for the Coronavirus Business Interruption Loan Scheme (CBILS) on Monday (23 March), and claimed the loan can provide facilities of up to £5m for smaller businesses across the UK which are “experiencing lost or deferred revenues”, leading to disruptions to their cashflow.
However, Banks recently came under fire over the government-backed emergency loans, after requesting business owners to sign for a personal guarantee.
The BBB said the loan would come at the “discretion of the lender”, and added that the borrower “always remains 100% liable for the debt”, as opposed to the banks or the government, which previously said it would underwrite 80% of the loans’ value.
According to the BBC, the loan leaves business owners at risk as banks can come after the personal property of the business owner if they cannot afford to pay the debts. This reportedly won’t include main homes, but banks could claim other assets including personal savings, shares or holiday homes.
Barclays reportedly told its customers that in order to access the funding they would need to sign a personal guarantee. Additionally, HSBC told the BBC it will require a form of personal guarantee for loans over £100,000.
It comes after Sunak announced the CBILS in his maiden Budget speech to support up to a further £1bn lending to SMEs and a £2.2bn grant scheme for small businesses.