The DMA has listened to its members and is calling for banks to remove the personal guarantees from the CBIL scheme, to ensure the UK’s SME community can survive.
The UK Government’s Coronavirus Business Interruption Loan (CBIL) Scheme was welcomed by many businesses around the UK when it was announced.
The loan scheme is intended to help small- to medium-sized businesses to secure their cash flow during these challenging times, with loans of up to £5 million with 80% guaranteed by the government.
However, dozens of Data & Marketing Association (DMA) member organisations have expressed concerns about their experiences with banks when applying for a CBIL. In fact, just one business has spoken of a positive experience with the scheme, while many more were shocked by the personal guarantees and interest rates they are being asked to agree to.
Indeed, many member organisations the DMA has spoken with shared correspondence with leading banks – including Barclays, HSBC and Lloyds – asking for personal guarantees.
Chris Combemale, CEO of the DMA, said: “When the CBIL scheme was first announced, many of our member organisations across the UK were hopeful.
They believed, like us, that the scheme would provide the essential cashflow required to survive the current crisis. The businesses we’ve spoken to expected the 80% guarantee to mean just that.
For instance, a loan of £100,000 would have 80% guaranteed by the government without the small business owner needing to guarantee the loan personally. However, that doesn’t appear to be how many banks are implementing the scheme.”
The application form to the CBIL Scheme from Lloyds, clearly indicates that the full liability would be owed by the business owner and recovered from them personally. This would be the case even if the business entered insolvency proceedings.
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