Lloyds Banking Group is rushing to fix a flaw that has left subsidiaries of overseas companies struggling for weeks to gain access to UK government guaranteed loans during the coronavirus crisis.
Subsidiaries in the UK have been caught out by the eligibility criteria for the Coronavirus Business Interruption Loan Scheme (Cbils) guaranteed 80% by the government, as well as by internal bureaucracy within the Lloyds bank which automatically blocked account managers from accessing the right loans for their clients.
For qualify for Cbils – which is aimed at small and medium-sized businesses that do most of their business in the UK – a company’s annual turnover cannot exceed £45 million. However, local subsidiaries must account for all of their group’s turnover when applying for membership of the system.
It was one of the main hurdles Milton Keynes-based steel maker Sikla UK faced when it approached Lloyds for a £250,000 emergency loan in March.
Harry Starke, the chief executive of the Austrian firm, said he was initially surprised by the bank’s request for a personal guarantee, which only the owners of the business would typically provide. Rishi Sunak finally personal guarantees prohibited following a public backlash, but Starke found that the business was ruled out due to Cbils’ revenue calculation which counted its £5m turnover as a £140m business by year.
But when the scheme was set up, Starke’s account manager in Lloyds’ small and medium business division was unable to access the wider scheme. Only customers of its commercial division aimed at large enterprises could apply.
Starke told the Guardian he wasted hours trying to apply for the scheme and wished Lloyds had been transparent about the group’s turnover count from the start. He has been waiting six weeks for funding.
Lloyds acknowledged the problem, but insisted that only a limited number of businesses had been caught out by the problem. It is understood that a workaround could be in place as early as next week.
A Lloyds spokesperson said: ‘For a very limited number of SMEs, which are part of a larger group of businesses with a combined turnover of over £45m, they may be eligible to the Clbils rather than the Cbils. We liaise with these customers to ensure that we can provide the financing they need as quickly as possible. »