CBILS to trigger a wave of complaints  

A new dispute resolution body, the Business Banking Resolution Service (BBRS) is preparing for an influx of cases relating to support loans, particularly from companies whose applications were declined.

The BBRS is set to launch in mid-November and was initially preparing to tackle cases dating back to 2001. Before the pandemic, it was estimating it would be handling around 60,000 cases, but this number is set to surge.

It’s been reported that the BBRS was briefed by the Treasury to anticipate a rise, and this came just before the chancellor announced an extension to the application deadline for the four Covid-19 business relief schemes.

A spokesperson for the BBRS said: “We have been very concerned about the impact of Covid-19 on the UK’s SME community. The pandemic has the potential to lead to an increase in the number of unresolved SME banking disputes.”

The spokesperson added: “We continue to emphasise that the Covid-19 support loans are loans – not grants – in order to minimise misunderstanding and to reduce the number of complaints that do eventually arise.

“We remain concerned about the wider economic outlook for SMEs but are well prepared for any increase in disputes following our launch this autumn.”

As the BBRS has been preparing for the influx of grievances, commentators highlighted ongoing issues with approval rates for the four support loans schemes.

Gregory Taylor, head of financial solutions at MHA MacIntyre Hudson, the advisory firm, said: “Hopefully Rishi Sunak will take this opportunity to reform the schemes to improve the success rate of applicants.

“The overall approval rate is too low at 63%, and this number is skewed by the Bounce Bank Loan Scheme, which is running at an 82% approval rate, the most successful of the schemes in deploying liquidity.”

Taylor explained that the more substantial CBILS scheme which larger SMEs can access is only running at a 49% approval rate.

Although the Bounce Back Loan Scheme saw more and faster approvals, recent research conducted by MarketFinance, an online platform that helps SMEs access finance, shows many businesses are running dangerously low on these loans.

After surveying 2,000 businesses that took on a Bounce Back Loan, MarketFinance found that these businesses have an average of just over £9,100 remaining of the loan and the majority expect this will run out later this month. Some six percent have already repaid their loan.

Anil Stocker, chief executive at MarketFinance, said: “It’s essential that businesses start looking beyond simply survival and begin evaluating how they can adapt their business to these Covid-conditions. There might be new ways to change the business model and get growth going again.”