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Extension of CBILS and Bounceback loans is just sticking plaster

The Chancellors extension of the CBILS and Bounceback loan schemes, is just a sticking plaster to the funding crisis facing business, say leading tax and advisory firm Blick Rothenberg.

Richard Churchill a business advisory partner at the firm said: “ Not only that but the access to the money is also no longer quick and many businesses face weeks of battles with their bank to access the funds.’

He added: “ Whilst not announced there has clearly been new guidance issued to the banks by Government to tighten up on the lending and reduce the fraud risk. This is shutting the door after the horse has bolted.

“ For those businesses desperate to access the cash now who may have not previously used the scheme they face weeks of delays with the banks answering many questions regarding their business affairs, connections with other businesses and use of the funds.

“ These may be fair questions but with the banks still swamped the promised 48-hour process often takes 4-6 weeks which is far too long.”

Richard said: “ For those businesses accessing the Bounceback loan scheme the Chancellor should increase the limit of bounce back loans to either £75k or £100k. For those businesses accessing the CBIL lending scheme he should increase the Government guarantee to 100% on CBIL borrowing of up to £250k and ask banks to recalculate affordability measures on borrowings based on the extended 10-year term for CBIL borrowings and allow businesses to increase their existing loans.”

He added: “ With the continuing changing business landscape from lockdown to no lockdown to tiers and movement between tiers businesses are constantly having to adapt to their trading environment. Buying stock, getting rid of stock buying PPE making their premises Covid secure, having people in their offices or working from home. All of this requires further cash to be spent by the business at a time when for many they have exhausted their cash resources.”

Richard said:” When the Bounceback loan scheme was introduced this was to allow businesses to access funds quickly and was capped at £50,000 or 25% of their annual turnover. However, this limit has not been changed and despite the fact that the crisis has carried on for much longer than anticipated and businesses have been expected to Bounceback multiple times. Given the initial average loan for the first few months was over £30,000 it is clear this limit is woefully inadequate.”