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DMA calls on banks to rethink coronavirus lending

The Data & Marketing Association (DMA) calls on banks to remove personal guarantees from the Coronavirus Business Interruption Loan (CBIL) program, after receiving comments from its member organizations who expressed concerns over CBIL’s request .

Only one company that provided feedback spoke of a positive experience with the program, while many others were “shocked” by the personal guarantees and interest rates they were asked to provide. accept. Indeed, many DMA member organizations have exchanged correspondence with leading banks – including Barclays, HSBC and Lloyds – asking for personal guarantees.

DMA CEO Chris Combemale said: “When the CBIL program was first announced, many of our member organizations across the UK were optimistic. They believed, like us, that the plan would provide the essential liquidity necessary to survive the current crisis. The companies we spoke with expected the 80% guarantee to mean exactly that. For example, a loan of £ 100,000 would be 80% government guaranteed without the small business owner having to personally guarantee the loan. However, that does not appear to be the number of banks that are implementing the program. “

An excerpt from Lloyds’ CBIL Scheme application form, which states that full liability would be owed by the business owner and recovered personally, even if the business were to initiate insolvency proceedings.

The DMA calls on the UK government and the big banks to take immediate action, clarifying these key issues for business.

Combemale added: “None of the SME members we spoke with would be able to accept a loan on the terms currently offered by the banks. Instead, many would be forced to choose insolvency, resulting in the loss of tens of thousands of jobs in the UK data and marketing industry. We call on the banks and the UK government to use common sense and work collectively to ensure this does not happen by removing the need for SME owners to provide personal guarantees for these loans. “

The DMA said: “[It] appreciates the unprecedented support the government has provided during this difficult time for the people of the UK. It’s also important to recognize that some banks haven’t asked for personal guarantees, and all banks go to great lengths to help customers – through mortgage holidays and help with card fees.

“That said, the DMA strongly calls on banks to remove personal guarantees linked to the CBIL program, to ensure that the thriving UK SME community can survive this crisis as well.”

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