Lloyds Bank has come under fire from one of the UK’s leading accountants for requiring trustees applying for emergency small business loans from the government to provide details of their income and expenses.
Clive Parritt, the former chairman of the Institute of Chartered Accountants of England and Wales, wrote to Lloyds chief executive Antonio Osorio, describing the bank’s request as “illogical and totally irrelevant”.
He says Lloyds Bank is taking a ‘ridiculous approach’ to requests from business leaders for the Coronavirus Business Interruption Loan Scheme.
One of the questions on the Lloyds form requires directors to state: “Document of personal income and expenses completed for all directors/shareholders of the company”.
In the letter seen by Reaction, Mr Parritt says: ‘The loan is for a business, guarantees are specifically excluded, so the income and expenses of directors and shareholders are inconsequential, intrusive and there is little likely to be readily available.”
He continues: “Is this a government requirement or another effort by banks to avoid helping small businesses?”
The letter to Osorio from Lloyds was also copied to the Chancellor, Rishi Sunak, the Treasury team, the British Business Bank, which helps with loans, and the Institute of Chartered Accountants.
Mr. Parritt, who was President of Baker Tilly Accountants for many years, is now actively involved in a number of small businesses.
His criticism follows an outpouring of anger over the way big banks and other lenders have approached the government’s £330billion bailout to underwrite loans to UK businesses big and small.
The Chancellor has been forced to revise parts of the CBIL scheme, particularly those affecting the six million UK SMEs who have found it nearly impossible to get their loans processed or approved and whose cash flow situation is most perilous.
Banks were ordered to drop previous rules which stated that lenders could only use the CBIL program in situations where they could not provide a facility on normal commercial terms.
The aim of the CBIL scheme is to provide around 40 lenders with a government-backed guarantee of 80% on losses that may arise on installations of up to £5 million.
The loans are offered to businesses with a turnover of no more than £45 million.
As of yesterday, only 2,022 loans out of almost 300,000 applications have been approved for small and medium-sized businesses in the UK.
There have been approximately 300,000 requests to date.
According to UK Finance, the banking sector’s trade body, some £291.9m had been lent through CBILS through the Coronavirus Business Interruption Lending (CBILS) scheme.
UK Finance reports that 52,710 telephone inquiries and 256,483 online inquiries were made.