Investors chase profits as UK biz loan programme concludes

LONDON • With just three weeks to go before Britain’s state-backed business loan programme stops accepting applications, MarketFinance Ltd, a London-based financial-technology lender, has secured £50 million (RM275 million) from Israel’s Viola Credit to fund new loans.

Viola is betting that demand for credit among small and medium enterprises will soar as the government-backed financing winds down. MarketFinance has originated £43 million in loans under the Coronavirus Business Interruption Loan Scheme (CBILS) at an average annual interest rate of 4.25%, compared to the central bank benchmark of 0.1%.

“We are predicting that there will be quite a big rush to obtain loans toward the deadline,” said Anil Stocker, the CEO of MarketFinance, one of the more than 100 lenders accredited by the British Business Bank to make loans backed by an 80% government guarantee.

Stocker said a key driver will be borrowers who obtained emergency financing through the government’s Bounce Back Loan programme. Unlike CBILS, which capped loans at £5 million, the Bounce Back ceiling was £50,000. Backed 100% by government guarantees, lenders have approved £35.5 billion in Bounce Back loans for 1.2 million enter-

prises, according to data from the Treasury.

Now many of those businesses that still need cash may try to refinance Bounce Back loans into CBILS ones, Stocker said. While the Treasury has stated that there are no plans to extend the CBILS’s Sept 30 deadline, lenders can process applications received before Sept 30 well into the fourth quarter. The extraordinary loan activity triggered by the pandemic is poised to continue for some time to come. — Bloomberg