CBI calls for changes to CBILS to speed up the flow of much needed cash to SMEs.
The CBI is positive about government support but is deeply concerned about the scale of the cash crunch businesses are facing. The two key elements of this support are the Coronavirus Job Retention Scheme, CJRS and the Coronavirus Business Interruption Loan Scheme, CBILS.
For businesses facing liquidity problems, every day counts and CJRS is a lifeline. Key scheme dates are HMRC portal opening on the 20 April to receive claims and monies reaching businesses by 25 April, in time to run month end payrolls. The CBI is also requesting that the government gives businesses at least 45 days’ notice of the CJRS coming to an end.
The demands on the CJRS system will be extreme and HMRC has deployed staff and called on the accountancy and tax professions to help guide businesses through what it hopes will be a largely self-service process. It is crucial that CJRS delivers the cash businesses need to allow them to “hibernate” and positions them for revival.
CBILS, is effectively the loan scheme in place for the SME sector. It has had a creaky start and has already been tweaked to increase the speed with which loans are approved and cash reaches business. The CBI suggests that still only 6000 loans have been approved from over 28,000 applications. “The scheme is working but working slowly” says Carolyn Fairbairn, Director General of the CBI. In the CBI’s daily webinar, she goes on to say that they are talking with the Treasury about changing the government backed guarantee from 80% to 100%. This would mean the banks do not have to risk assess the loans, which currently and understandably slows the process down. The Chancellor hinted that this step may be under consideration at his press conference yesterday (14 April).
The hope is that this would make CBILS a more expedient, less risk averse scheme.
The CBI seems to suggest that more grant support will be needed to help businesses through the cash crunch and suggest that possible delivery methods for this support could be the business rates system, the insurance industry and the business tax system.
Wayne Thomas, partner at Bates Weston comments:
“We agree with the CBI’s views. Cash needs to get into businesses quickly and simply. We stand ready to help our clients through accessing CJRS, and as soon as we have more guidance from the Treasury, we will be sharing it with our clients. As far as CBILS is concerned, our clients need to be able to access loans quickly and removing the need for the risk assessments would certainly help in the short term. “