Covid-19: Business Interruption Loans

Viscount Trenchard Excerpts

Wednesday 22nd April 2020 Lords Chamber

[Lord Callanan]

My noble friend asked two good questions. We are aware of her first point about vetoes, and are considering it closely as we work out the further details of the scheme. As regards her second point, private investor capital lent alongside the government capital will not qualify for EIS relief.

[Viscount Trenchard (Con)]

My Lords, I declare my interests as set out in the register. I regret that the Government’s intention to rescue sound businesses whose income has suddenly and completely dried up through the provision of CBILS loans has been less effective than intended as a result of the 20% personal guarantee requirement of some lenders, as pointed out by my noble friend Lord Forsyth. Does the Minister agree that a reduction of the personal guarantee requirement to 10% might make a considerable difference to the conversion rate of loan applications to lifelines extended?

[Lord Callanan]

We have made some changes to the scheme so that no personal guarantees are permitted for loans of below £250,000. For loans above that level, lenders are permitted, at their discretion, to require personal guarantees for up to 20% of the remaining loan value. They are never permitted to use directors’ primary personal residences as security, and of course lenders may turn to personal guarantees only post the recovery of business assets. That is a balanced approach which protects CBILS borrowers but, like many other aspects of these schemes, this is something that we will keep under constant review.