CBILS goes digital, but lags behind BBLS

Since the Coronavirus Business Interruption Loan Scheme (CBILS) went live on 23 March, the British Business Bank (BBB) has been adding to its list of approved lenders.

Starting with 40 accredited lenders and partners, the list reached 60 in early May and built through the month to its current total of 76. Recent additions include fintechs Starling, iwoca, MarketFinance and Capital on Tap.

Capital on Tap CEO David Luck said the digital lender will primarily target smaller businesses, “from beauty salons, family-run companies, small agencies - those who have struggled the most with accessing funds so far during this pandemic”. 

iwoca CBILS accreditation

Funding fintech iwoca was the most recent addition to the CBILS lending list, receiving approval on 20 May. 

“Having already served over 50,000 customers since 2012, our processing capabilities for lending match, and, in many cases exceed, those of the big banks,” iwoca CEO Christopher Rieche said following its accreditation.

According to the Office for National Statistics, the UK has nearly 800,000 businesses generating over £250,000 in annual revenues, 450,000 of which turn over more than £500,000. “The demand for CBILS from these businesses is significantly larger than the combined processing capacity of the banks, who, in normal times, approve approximately 7,000 small business loans per month and in April approved around 25,000 under the CBILS,” Rieche said.

“As a non-bank lender, we do not have access to financing from the Bank of England. During this unprecedented time, the Government needs to go one step further to level the playing field between banks and non-banks so that we can deliver on their commitment to save Britain’s small businesses.”

Starling answers for CBILS

In a recent Treasury Committee session on the economic impact of Covid-19, Starling CEO Anne Boden explained that the BBB’s decision to base CBILS on an existing scheme was slowing access to critical funding.

“That existing scheme was not meant to process all this volume. The old scheme was intended to take one loan at a time, with someone sitting at a laptop or a screen of some sort to key the details in,” Boden told the committee.

Boden revealed that a new system is currently being adapted to connect the banks’ big systems automatically with the BBB system, but this would not be available until mid-June.

“In the meantime, I believe the BBB has given a waiver so that there can be limited reporting until those connections are available,” she said.

But in order for CBILS to function efficiently to the required scale, automation is crucial. “And key to this is the building of APIs, [which will] connect the banks’ systems to the BBBs system,” said Boden. “Once that is available, things will go much faster.”

Starling was added to the accredited lenders list for the Bounce Back Loan Scheme (BBLS) on 7 May and began accepting loan applications from 11 May.

However, Countingup CCO Andrew Garvey pointed out that “the cheap interest offered through BBLS locks out the majority of fintechs as they don’t have the capital to offer lending at 2.5%.”

Barclays stumbles

During the session, Chair Stride raised the issues Barclays has been facing with its online lending systems, BBLS in particular, and asked Barclays CEO Matt Hammerstein to account for its portal being down, among other problems.

“It is definitely not down,” Hammerstein answered, despite the overwhelming evidence suggesting the contrary.

“We knew that there would be significant demand for the service, so we have made sure that when we launch the capability on our online banking platform, we can do what our technology team call ‘throttle up’ the access to it. So some individuals who wanted immediate access might have tried to get access, but were not yet able to. 

“The technology is working fine. We are just making sure that we make it available safely. By the middle of the day (4 May) we should have made it available to all customers.”

However, three weeks later, many Barclays customers are still reporting issues accessing its BBLS portal.

Rangewell releases CBILS/BBLS dashboard

This morning (26 May), business finance experts Rangewell announced its new dashboard which scrutinises the data published around CBILS and BBLS.

Rangewell data on BBLS:

• BBLS payments value total in the first week alone surpassed the total of all CBILS payments to date.
• Bounce Back Loans achieved a 90% approval rate in its second week. Anything more would be highly unlikely given that banks still have a duty of care against reckless lending, according to Rangewell.
• The average size of BBLS has been £30,534 vs CBILS’s £178,334 over the full period for both schemes.
• BBLS has been successful, with £14.2bn lent in the first two weeks.

Rangewell data on CBILS:

• CBILS approval rates last week was 28%, compared to the overall 50% rate since the scheme started. “It will be interesting to see if this recovers this week or is a symptom of lower-quality loans / higher scrutiny by lenders,” commented Rangewell.
• The volume of CBILS applications has continued to fall but the value of approved loans is now at  £249,000 – the highest to date (compared to the £178,334 average since commencement). This is likely to be skewed by the lower value loans (under £50,000) now being taken by the Bounce Back Scheme.

Rangewell research consultant Nic Conner commented: “While the Bounce Back and CBIL Schemes have been a godsend to hundreds of thousands of small businesses to help them cover expenses during the lockdown, we would now encourage the government to start thinking in more detail about the future.” 

Rangewell believes switched-on businesses are now preparing for the next 6-18 months, instead of day-to-day survival. “The government should be thinking and planning alongside them for the next stage of economic recovery,” said Conner.