Coronavirus: Lloyds to urgently fix COVID-19 loan flaw

Yahoo Finance UK
Photo Illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images
Photo Illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images

UK subsidiaries of foreign companies have been struggling for weeks to gain access to coronavirus loans due to a flaw in Lloyds Banking Group’s (LLOY.L) systems.

The bank is now rushing to fix the error and hopes to have a solution in place next week, The Guardian reported.

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Some small and medium sized enterprises (SME) in the UK have been caught out by eligibility criteria for the 80% government-guaranteed coronavirus business interruption loan scheme (CBILS). This has been made worse by Lloyds bank processes, which automatically block account managers from accessing the right loans for their clients.

The CBILS scheme is aimed at SMEs that conduct most of their business in the UK and a company’s annual revenue cannot top £45m ($55.8m). But local subsidiaries within the company have to count their entire group’s turnover when applying for the scheme.

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Harry Starke, managing director of Austrian-owned steel manufacturer Sikla UK, based in Milton Keynes, told The Guardian how he had been waiting for funding via Lloyds for six weeks.

He initially applied for a £250,000 emergency loan in March but found the firm was barred due to the CBILS revenue calculation that counted his £5m turnover firm as a £140m-a-year business.

He then waited for the new coronavirus large business interruption loan scheme (CLBIS) only to find his Lloyds SME account manager could not access the larger scheme. Only clients in its commercial division could apply.

Lloyds has acknowledged the issue and said only a limited number of businesses had been caught out.

A Lloyds spokesman said: “For a very limited number of SMEs, who are part of a wider group of companies where the combined turnover is over £45m, they may be eligible for CLBILS rather than CBILS. We are liaising with those customers to ensure we can provide the finance they need as quickly as possible.”

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