APSCo writes to Chief Executive of British Business Bank

Dear Mr Morgan,

I am writing on behalf of the Association of Professional Staffing Companies (APSCo) to highlight some of the challenges which our members have encountered when applying for finance via the Coronavirus Business Interruption Loan Scheme.

By way of background, APSCo is the representative body for the professional recruitment sector and is comprised of approximately 1000 recruitment and affiliate members from start-ups to listed global groups. Many of our one thousand recruitment industry members are SMEs operating across the professional staffing sectors, primarily in STEM, banking and finance and general professional, including teaching and qualified social work. 

APSCo and our members appreciate the multi-layered support the Government has extended to private sector businesses and in particular SMEs, to allow them to trade out of the economic crisis brought on by Coronavirus, and it is very much our role to offer guidance and support to our members as they seek to access this support.

Unfortunately, many of our members have contacted us to express concern about the ease of access to the Coronavirus Business Interruption Loan Scheme (the Loan Scheme) and their eligibility for it. This concern was evidenced by the results of our recent membership survey in which a third of respondents, all within scope of the Loan Scheme, said that the criteria are prohibitive, and the application process is complicated and difficult.

We know this is also of concern to HM Treasury as evidenced by their open letter of 25 March in which they state the priority for all of the financial sector must be to ensure that the benefits of the measures implemented by Government are passed through to businesses and consumers, which will require a willingness to extend lending despite the uncertain economic conditions.

Due to the nature of our work, the recruitment sector has been particularly affected by impacts on cashflow and has suffered from the almost total freeze in the professional employment market. Recruiters pay agency workers before they are paid by their clients, and they are also being asked by Government to fund furlough for agency workers under the Coronavirus Job Retention Scheme prior to the reimbursement scheme going live.

It is therefore vitally important that the Loan Scheme is accessible for our members, who have reported that some of the challenges experienced in accessing it include:

• A lack of transparency around eligibility and the criteria applied.
• Disparate approaches taken by the banks, particularly on eligibility.
• Requirements for personal guarantees and extremely high rates of interest, despite the Government backed security; and
• Sales techniques adopted to persuade customers to use other, non-Government banked, forms of credit.

The overriding issues are a lack of consistency in the exercise of the banks' discretion in applying the Scheme, and an unwillingness to relax normal lending rules. We accordingly ask for:

• Transparent, publicly available guidance to be issued by the British Business Bank directed at the banks, on applying discretion in decision making on eligibility, credit worthiness and appropriateness of the scheme to individual circumstances.
• Public, auditable and swift measurement of the banks' adherence to such guidance, giving credit for transparency, speed of processing of applications, numbers and value of loans provided under the scheme.

We appreciate that many retail banks may be cautious of allegations of mis-selling loans to customers after the Coronavirus economic crisis has abated. Nonetheless, we consider that they are failing to take heed of HM Treasury's request for cooperation and flexibility as set out in its letter. Hence, steps must be taken to require them to apply the scheme fairly, equitably and with the primary aim of protecting SMEs and the wider economy in the mid to longer term.

APSCo recognises that the British Business Bank will have likely received many representations from other organisations highlighting similar issues which have been encountered, and we hope this contribution can help the BBB to further shape and administer the Loan Scheme in line with the spirit of what the Government intends.