Almost three weeks after the chancellor, Rishi Sunak, first launched the scheme to help small and medium-sized businesses with loans and other financing of up to £5m each, it has emerged that just 4,200 of the estimated 300,000 firms that sought help online have received rescue loans.
Tens of thousands of firms are understood to have made formal applications, but amid accusations of excessive bureaucracy and a reluctance among lenders to make loans, only a fraction have been given the go-ahead.
Alok Sharma, the business secretary, revealed the lack of progress as pressure mounted on officials and leading banks to speed up the processing of loan applications before thousands of businesses go bust.
Sunak has reacted to criticism of slow progress by recruiting former Bank of England adviser Richard Sharp as a consultant with a brief to speed up the processing of rescue loans.
Sharp, a former Goldman Sachs banker who was Sunak’s boss during the chancellor’s time at the investment bank, was a member of the Bank’s financial policy committee working with the new governor, Andrew Bailey.
Sunak expects to announce Sharp’s appointment this week. He also expects to finalise plans for an extension of the loan scheme to include businesses with a turnover above £500m, including doubling the interest-free sums available to businesses to £50m.
Sharma told Sophy Ridge on Sunday: “The latest figure that I have is around 4,200, and just over £800m has gone out.
“I have spent the last couple of days talking directly to some of the largest lenders who are part of this scheme and I have been very clear to say to them that we need to get money out of the door as quickly as possible. They understand that … we have set this up at pace and everyone is literally working around the clock.”
When challenged that the current numbers equated to a success rate of just 1.4%, he did not dispute this figure. Asked whether he was worried, the business secretary said: “Well, of course. It is not just a question of me being worried – I completely understand the concerns that businesses have.”
On Wednesday the British Chambers of Commerce said only 1% of firms responding to its survey had managed to secure a loan under the scheme, while 7% had received one of the grants offered to small businesses by the Treasury.
On 3 April, Sunak loosened the criteria for CBILS loans and banned banks from asking for personal guarantees from small businesses seeking help.
The shadow business secretary said thousands of companies were on the verge of collapse, and that without a bigger commitment from the government, they were likely to go bust. “The risks of doing too little, too slowly to help businesses are much greater for the long-term health of the economy than the risks of doing too much, too quickly,” he said.
A lack of available bank staff is understood to have held up initial applications, despite the fact that bank employees are considered key workers.