The entrepreneur behind two of Bristol’s most successful invoice finance firms is claiming the government’s newly-amended package of business support will still not be enough to save many small firms.
Chancellor Rishi Sunak announced changes to the measures yesterday amid widespread criticism that they were not assisting enough businesses and that some banks were putting too many restrictions on new loans, including seeking personal guarantees from small business owners. 
The changes will enable larger firms – those with turnovers as high as £500m – to access support while also widening and hastening the flow state-backed cash to smaller companies.
But Richard Pepler, pictured, CEO and founder of Bristol-based invoice finance specialist Optimum Finance – and former chief executive and co-founder of factoring group Ultimate Finance – fears the new rules will still not help businesses access vital funds they need now.
“By the end of this month thousands of businesses could go to the wall as they run out of cash and can’t pay their monthly overheads like rent and rates and staff salaries, which even if they have furloughed staff, they will still need to pay until the government scheme is set up,” he said.
“The new rules will still mean business owners need to provide evidence of previous business viability through their accounts, demonstrate they have sufficient security and undergo company and personal credit checks.
“To date the treasury has received 130,000 applications and only 1,000 have been approved (0.76% of businesses).
“Under the terms of the CBILS (Coronavirus Business Interruption Loan Scheme) scheme, a business can only access the funding for loans of less than £250,000 if it can provide security of 20% which cannot be a personal cash or primary residence guarantee.”
This made it virtually impossible for a small business to apply in practice, as business owners cannot use the only security easily available to them to guarantee 20%, he said.
“All of the businesses that I have spoken to so far have failed at this hurdle as they simply do not have the business assets available to provide this guarantee. It does not mean they are unsuccessful firms and it definitely does not mean they should be abandoned during this time.
“British Business Bank, which has been tasked by the government to run the scheme through UK banks, is advising lenders on the criteria check needed before loans can be approved. However, banks are still able to charge whatever interest rate they choose after the initial interest free period despite interest rates being at an all-time low.
“The intention with the loans was to enable businesses to access cash – fast. And this still won’t happen with the new rules – this is a ticking time bomb for the UK economy.”
Mr Pepler has joined with other non-bank lenders to call on the Treasury to “fundamentally rewrite the scheme and not try and put a sticking plaster over a botched idea”.
He added: “Time is of the essence. The government should be engaging with a range of lending firms – for example, in my industry invoice finance, we are working hard to get cash released based on companies’ sales ledgers in days not months.
“We’ve already saved several businesses which have failed to be approved for CBILS loan, but we are just one firm and this problem is not going to go away.”
