How have the banks responded to the CBILS?

Throughout these uncertain times, people from around the world and closer to home in local communities, have stepped up the ante to help out the vulnerable and those most at need. Companies that are fortunate enough to weather the storm are offering their services to help where they can. At Fractal we felt that it was our duty to step up and support small businesses - an already underserved sector and one that will suffer greatly from this pandemic. 

In recent weeks, the government has offered eligible small businesses an unprecedented £330 billion of help in the form of the Coronavirus Business Interruption Loan Scheme (CBILS) - the biggest bailout package ever created in the UK (side note - we know we weren’t the only ones asking where all of this money suddenly came from; we loved this article from the Independent’s Ben Chu who explains it all very concisely. He believes that the government money will bring more debt to the financial market, and have long-term ramifications for other areas that rely on public spending).

Backed by the British Business Bank (BBB), the CBILS provides term loans, overdrafts, invoice finance and asset finance of up to £5 million for small-medium-sized-enterprises (SMEs) with a maximum turnover of £45 million. The BBB is backing 80% of the risk of all loans, leaving the banks with 20% of the risk. The government will also cover the first 12 months of interest payments and fees.

As a fintech who works with financial institutions to help support small businesses, it disappointed us greatly to hear of the struggles small business owners are having when dealing with their banks and insurers. Although the UK Government has announced that £90 million worth of finance has been approved for nearly 1000 firms, reports of high-interest rates, long waiting times or unjustified rejection of loans have been pouring in from SMEs. Furthermore, many SMEs also feel that they are not covered by the scheme, as they are offered other credit plans or are deemed to be simply not creditworthy.

But, the main issue with the scheme is the question of personal guarantees covering the remaining 20% not backed by the government. On the 3rd of April, the UK Chancellor, Rishi Sunak announced that lenders are banned from requesting personal guarantees for loans under £250,000, but are the banks respecting it? An investigation from the BBC found that even if the banks refrain from taking the main property as security, other assets such as personal savings, shares or holiday homes could still be repossessed.

These challenges faced by small businesses sparked our curiosity, so we decided to take a look at a few of the BBB approved lender’s websites to see what they are expecting from small businesses applying for the CBILS, and what’s been said so far on their practices (all information correct as of 10/04/20).


Bank of Ireland (UK): On the BOI’s website: “At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS”. They are also aiming at providing ‘emergency working capital, payment flexibilities on loan facilities, prioritisation of funding requests, and provision of trade finance and foreign currency products’.

Barclays Bank: The bank first came under fire for insisting on personal guarantees and making business owners personally liable by putting their personal assets, other businesses, and second homes at risk. Many business owners had initially reported that Barclays asked them to cut their staff or put their own assets on the line for a loan. Barclays also had to apologise when business owners denounced interest rates, said to be as high as 12 per cent. Barclays has announced that they will remove personal guarantees for loans under £250,000.   

HSBC Group: HSBC has also been subject to criticism after it told the BBC it requested a form of personal guarantee for loans over £100,000, but they have now issued a statement that promises to take no personal guarantees for loans below £250,000. If the loan is over that amount, it has opted to only take personal security for 10% of the loan, instead of the 20% that the government allows. Amanda Murphy, Head of Commercial Banking has said in a statement that HSBC, “welcomes the Chancellor’s announcement this evening, setting out changes to the CBILS”. 

Lloyds Banking Group (including Bank of Scotland and Halifax): Lloyds first faced criticism, when Lancashire-based engineering group Dodd revealed that Lloyds wrote to them stating that, ‘the government terms of this support are that the directors/shareholders of the business personally guarantee the full amount (...) the government backing sits behind your personal guarantee’. Lloyds Banking Group has now said they will not take personal guarantees on the CBILS loans of up to £250,000 and that security for larger loans would be decided on a case by case basis.

Northern Bank Limited (trading as Danske Bank): On their website, they state that you may need to provide security, but do not specify whether that’s if the loan is under £250,000. They have also featured on their website a report about Lunns the Jewellers, one of their first local customers that obtained the CBILS through Danske Bank. However, it is worth saying that Lunns’ loan is one of a mere 49 granted loans by Danske Bank in Northern Ireland.

The Royal Bank of Scotland Group: RBS confirmed that they will offer loans without asking business owners for personal guarantees. A spokesperson for Ulster Bank also said that they, “welcome the launch of the CBILS as we continue to support SMEs through these unprecedented times”. RBS hopes that with their precedent, other lenders will now be pressured to follow. They even decreased the minimum size of loans to be included in the programme to £5,000 to pave the way for smaller companies and sole traders to be included in the scheme.

Santander UK: Santander states that they will only take personal guarantees as security for lending over £250,000.


Small businesses are key to the success of the UK economy, contributing billions of pounds towards it every year. Financial institutions who were bailed out, post-2009-recession should see this as an opportunity to do better by their small business customers. Thankfully, the unpopular decisions of the few banks seen to be punishing small businesses with little choice of finance options reversed their policies. We hope that every financial institution who has the capacity to, supports small businesses throughout this time of uncertainty, and challenges others who choose to unfairly profit from the situation at hand.


We would welcome any feedback, clarifications and questions. If you are a small business who would like to tell us about your experiences, then please email Lisa at lisa@askfractal.com.

Although it is difficult at present, we are looking at how the Fractal platform can immediately support financial institutions and small businesses, and in turn, the future state of the economy in the UK and beyond. Please contact us if you would like to work on building something together.

For our interview with SMEs on their CBILS experiences, our guide on SME support available, tips on working from home, or our view on the UK Spring Budget, you can visit our blog.

For financial institutions who want to help their small business customers, you can see how Fractal has been at the forefront of this challenge for years.