Has the Coronavirus Business Interruption Loan Scheme been a success? We speak to entrepreneurs who decided to take on the debt
- £11.85billion has been lent to UK businesses via CBILS since its launch in March
- Many have had managed to get a loan quickly and easily to keep their business going while others have struggled with the process and some ‘unfairly rejected’
- Fashion designer Debbie Leon and furniture manufacturer Alex Ratcliffe have welcomed the ‘sense of security’ from taking out a Coronavirus Business Loan
Since its launch on 23 March, £11.85billion has been lent to businesses via the Coronavirus Business Interruption Scheme.
However, this only accounts for 54,538 approvals out of a total of 109,235 applications according to HM Treasury as at 12 July – a success rate of 50 per cent.
Many businesses have been unable to get financial aid from the Government via other schemes such as the Self-Employment Income Support Scheme, and so despite having to take on more debt, the CBILS has been a saving grace.
Only half of applications have been approved for a Coronavirus Business Interruption loan
The loans aim to provide financial support to smaller businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the Covid-19 outbreak.
It is managed by the British Business Bank through accredited lenders such as Funding Circle and The Co-operative Bank who can provide up to £5million per business.
The process has not been easy for everyone but for others it has been a lifeline. We spoke to three entrepreneurs who took on loans to get through tough times, to find out their views.
‘It has enabled us to move forward and keep going’
Entrepreneur Debbie Leon has had a more positive experience with applying for and getting a Coronavirus Business Loan.
The Londoner runs Fashionizer, a bespoke uniform manufacturer for the hotel and spa industries.
‘Coronavirus has had a major impact on our business,’ she said. ‘All of our clients in the hospitality and spa industries have been closed since mid-March, so we’ve not received new orders since then.
‘Our business turnover was down almost 95 per cent, while 80 per cent of our outstanding invoices hadn’t been paid, though most of our suppliers have been patient and understanding.’
Fashion designer Debbie Leon from London has had more success with the CBIL scheme
Debbie said it has not been easy to access Government funding and many banks have been slow in lending. She applied for a loan through her bank in March but had yet to hear a reply even by May.
She then decided to go to peer-to-peer lender Funding Circle, having taken a loan with them before, and the loan was granted within the week.
‘I’m using the loan to pay rent and pay some of our suppliers. It has enabled us to move forward and keep going. The added bonus of having 12 months’ no repayments means that we should finally start getting back on track, which is great.’
Lisa Jacobs, of Funding Circle, added: ‘Small businesses will be at the forefront of the economic recovery, and during this period it’s absolutely vital they get the financial support they need. We’re proud to be playing our role in helping.
Businesses could get as much as £5million via the Coronavirus Business Loan Scheme
Alex Ratcliffe from Bristol took out a Coronavirus Business Loan to keep his furniture production company, Konk Furniture, going.
He said: ‘Along with most businesses, Covid-19 hit Konk Furniture extremely fast and hard, with our strong start to the year in sales plummeting as a result. When lockdown started, our orders dropped by 70 per cent.
The 31-year-old said he tried to access a loan through a number of banks which was a ‘wasteful’ and ‘frustrating’ process. After several failed calls, he also approached Funding Circle.
‘The loan has given us a sense of security above anything else. We are also planning to use it for upgrading our workshop machines, investing in new designs and prototyping some new products.
‘Over the last couple of months, and certainly in the past month, we’ve seen things start to pick back up to the levels they were at before. As people are working from home and staying indoors more often, we’ve actually seen an uptick in sales.’
Small Business Essentials