UK digital banks unable to provide state funds to coronavirus-hit companies

Friday 27 March 2020 12:35 CET | News

Several of Britain’s digital banks are still waiting to hear if they can offer government-backed loans to struggling small businesses damaged by the coronavirus outbreak, days after a multi-billion pound rescue scheme was launched.

According to Reuters, neobanks including OakNorth, Tide and Starling - which have hundreds of thousands of business customers between them - have applied to take part in the so-called Coronavirus Business Interruption Loan Scheme (CBILS), but have not heard when they will be able to access the funds to help customers in need.

The scheme was first unveiled by Finance Minister Rishi Sunak last week as part of a GBP 330 billion (USD 397 billion) support package for firms hit by a sudden surge in costs from staff falling ill or self-isolating, and a simultaneous collapse in revenues triggered by the country’s lockdown.

The government-backed British Business Bank (BBB) launched CBILS by repurposing an existing funding scheme set up during the global financial crisis in early 2009 and backed by more than 40 accredited lenders, including the bulk of Britain’s traditional high street banks.

But digital banks who were not signed up to the earlier scheme have so far been unable to offer the relief funding to their customers, and remain subject to an accreditation process before they can participate.

The CBILS was initially expected to be worth 1.2 billion pounds but the government has since said it will be demand-led.

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Keywords: UK, digital banks, neobanks, funding, coronavirus
Categories: Banking & Fintech | Payments General
Countries: United Kingdom
This article is part of category

Banking & Fintech