UK digital banks unable to provide public funds to businesses affected by coronavirus
LONDON (Reuters) – Several UK digital banks are still awaiting whether they can offer government-guaranteed loans to struggling small businesses damaged by the coronavirus outbreak, days after a multibillion-dollar bailout was launched of books.
Neo-banks including OakNorth, Tide and Starling – which have hundreds of thousands of business customers between them – have applied to participate in the Coronavirus Business Interruption Loan (CBILS) program, but have not learned when they can do it. access funds to help clients in need.
The program was first unveiled by Finance Minister Rishi Sunak last week as part of a £ 330 billion ($ 397 billion) support package for companies hit by sudden cost increases due to illness or staff isolation, and a simultaneous collapse in income triggered by the country’s confinement.
The government-backed British Business Bank (BBB) launched CBILS on Monday by reallocating an existing funding program put in place during the global financial crisis in early 2009 and backed by more than 40 accredited lenders, most of whom traditional British banks.
But digital banks that had not joined the previous program have so far been unable to offer the relief financing to their customers and remain subject to an accreditation process before they can participate.
“It is important that new lenders are integrated quickly to meet demand. Tide has yet to receive a response to our registration of interest, ”said Managing Director Oliver Prill.
“There are fears that the BBB is under heavy demand, so we urgently call on the government to ensure it has sufficient resources and that management sets the right priorities. “
The CBILS was originally supposed to be worth £ 1.2 billion, but the government has since said it will be demand-driven.
OakNorth Bank, which was launched in 2015 and counts restaurant chains Leon and Brasserie Blanc and leisure groups Z Hotels and Nine Group Hotels among its customers, said the government must act quickly to prevent small businesses from going bankrupt. .
“Obviously we have a public health crisis right now, but what is really important is that we do not turn this public health crisis into a protracted economic crisis by not providing funds to the small. companies as quickly as possible, ”Nick Lee, chief regulatory officer for OakNorth, told Reuters.
A BBB spokesperson declined to comment on the number of requests it had received from unaccredited lenders and how long it would take them to process them.
“The number one priority was to get it in place (CBILS) and make it work. Now that we’ve done that, our priority is to get more lenders on board. We have allocated additional resources to processing applications, ”he said.
A spokesperson for Starling, founded in 2014, said: “We understand why they set up the program this way. The important thing is to put money in the hands of companies as soon as they can. “
Reporting by Sinead Cruise and Iain Withers; Editing by Kirsten Donovan