Tide CEO warns that the UK government’s measures to help SMEs through the crisis have “a worrying lack of reach”

The UK government has unveiled a package to help SMEs. However, the boss of challenger bank Tide doubt the package will be enough.

Oliver Prill, the CEO of the SME-focused neobank, has said that while he welcomes the measures outlined in the government’s Business Interruption Loan Scheme, he fears that many micro, small and medium-sized businesses will have no access to the measures  unless the government makes use of the whole of the UK’s financial services sector.

“These measures are generous and crucial to the survival of our small business sector,” Prill said. “However, there are serious problems in the speed and methods of delivery.”

He also announced that he has written to John Glen, the economic secretary to the Treasury, “to state that we believe the Coronavirus Business Interruption Loan Scheme (CBILS), accessible via the British Business Bank, has a worrying lack of reach.”

Prill added, “The British Business Bank has decided to work only with a few banks and lenders already on the Enterprise Finance Guarantee scheme. Most of these lenders have a history of under-serving the credit demands of small businesses.

“To deliver the scheme, the government must use the power of the whole financial services sector, from the larger and longer-established banks to modern providers like Tide.”

“The British Business Bank will only assume 80% of the risk on these loans. The other 20% will sit with the lender. Asking lenders to assume 20% risk is usually appropriate but at this time of crisis, the credit worthiness of small businesses deteriorates and this could lead to too few businesses being eligible.

“Furthermore liquidity available to lenders will be reduced in this crisis so the guarantee amount needs to come with funding.”

“By opening up the Coronavirus Business Interruption Loan Scheme to all lenders, the government would be able to support many more small businesses from failing.

“Small companies are crucial to the UK economy. Immediate emergency access should be given to all SME lenders as a ‘whatever it takes’ measure. Secondly, the scheme needs to be redesigned with the  current urgent situation in mind and with the will to act boldly.”

The news comes after Tide raised £44.1m in a first-round of Series B funding in October 2019. The startup aimed to use the capital injection to strengthen its hold of the UK business banking market and to prepare for an upcoming international expansion.

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