Government coronavirus business loan scheme “not working”, says Labour

Ed Miliband has declared that the government’s coronavirus business interruption loan scheme is “not working” in response to figures released showing that only 16,624 companies have accessed the funding.

Data published today on the uptake of the loans showed that a total of £2.8bn had been lent through the government’s business support scheme, but the Shadow Business Secretary warned that many are “still missing out”.

The business spokesperson argued that the loan mechanism is “inadequate” for the scale of the crisis, and said it’s “not good enough” that such a small proportion of the six million UK businesses have been able to receive support.

Commenting on the data released this morning, Miliband said: “Today’s figures show that the coronavirus business interruption loan scheme is in no way equal to the scale of economic distress facing our firms.

“Providing 16,000 loans in four weeks in a country of nearly six million SMEs is not good enough. In an average week last year there was more than £1bn of new SME lending.

“The fact that CBILS are now only at that level at a time of the worst economic emergency in our lifetimes is a clear sign that they are inadequate. The government must recognise the scheme is not working adequately and change it urgently. The future of many of our small firms depends on its decisions.”

As part of the emergency package of support during the coronavirus crisis, the government announced that it would underwrite 80% of business loans for companies, with banks taking on the remaining 20% of the risk.

Miliband called on the government last week to take on 100% of the risk, arguing that applications would be delayed as banks went through the normal commercial underwriting process.

The figures show that applications for support have doubled on the previous week – but only 16,624 loans have been approved out of a total of 36,000 requests, prompting concerns about companies that need access to cash quickly.

Other countries have seen a much larger amount of money, and higher number of loans, issued to their businesses. In Switzerland, for example, 70,000 business have claimed £12bn in one week.