Earlier this week I wrote online that I was unimpressed with the way the big banks were refusing firms access to the Government's interest-free Coronavirus Business Interruption Loan Scheme (CBILS), or insisting on personal guarantees from the directors. Under CBILS, the taxpayer carries 80% of the risk of these loans, so there should be no question of banks also insisting on any more than 20% of the loan to be secured by the directors' own assets.
I was prompted to this by a number of constituents getting in touch - large and small businesses, all perfectly viable and employing local people, who faced ruin despite the Government offering billions of pounds of taxpayers government to the banks to help them out. I also discussed the issue with John Glen, Minister at the Treasury (and fellow Wiltshire MP) who agreed with me that the purpose of the scheme wasn't being properly honoured by the banks.
Today we have a very positive development, with new guidance from Government and a new commitment from the banks to get loans out the door. This morning I spoke to HSBC's South West regional boss, James Shepherd, who explained to me how his bank will now work. HSBC will no longer refuse CBILS to firms which are also eligible for existing financial products - one reason given for blocking them from applying for CBILS - and they will not request any personal guarantees for loans below £250,000. For larger loans, only in exceptional circumstances will they ask for a guarantee and this will never be more than 10% of the loan value. They will continue to interrogate loan applications - understanding the firm's cost base and revenue forecasts - but they will take a generous interpretation of a firm's viability. Some businesses had a torrid 2019 because the political uncertainties over Brexit, but since the election in December have started to strongly bounce back. HSBC accepts this and tells me that unless a company was in financial difficulty prior to the outbreak of Covid-19, there should be no reason for them to be refused a loan. Mr Shepherd told me 'we're really opening up now'.
I hope this a relief to businesses and I urge everyone who has struggled with their bank in recent weeks to try again. Please do let me know how you get on and if there are further issues you would like me to raise with the Government or the banks.
I want to put on record my appreciation for the work of John Glen in unblocking the loan finance so many businesses are going to rely on in coming months.