MPs Tell Barclays Boss To Explain Covid Biz Loan Delays

By Joanne Faulkner
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Law360, London (May 7, 2020, 12:52 PM BST) -- Barclays came under parliamentary pressure on Thursday to explain delays in granting emergency loans to small companies seeking financial relief during the coronavirus lockdown.

Businesses have flooded banks with applications for the government's bounce-back loan scheme, which launched on Monday. The loans are facilitated by commercial banks but are 100% guaranteed by the state.

However, some Barclays customers have complained they are unable to get hold of emergency cash of up to up to £50,000 ($62,000) through the fast-track scheme, according a to key parliamentary committee. Applicants must complete an online form.

Treasury Committee Chairman Mel Stride has told the U.K. chief executive of Barclays, Matt Hammerstein, "to explain what is happening, and what [the bank] is doing to fix any issues that have arisen.

"Issues that hamper this are very frustrating to customers, and may in some cases threaten business survival," Stride added in a letter to Hammerstein.

Stride noted that Hammerstein had assured MPs during an earlier committee hearing that Barclay's online system would be able to cope with demand. He said that most applicants had succeeded, but added that some needed to provide extra information or additional signatures first.

"Barclays customers still seem to be facing issues, and new ones may have arisen," Stride warned.

The Conservative lawmaker has also asked Barclays to clarify how many applications require extra information and whether this is linked to anti-money laundering or so-called know your customer requirements.

A Barclays spokesperson said the lender has approved more than 50,000 loans worth more than £1.5 billion since the scheme launched.

"We're sorry that some customers are experiencing issues applying on our website and may be receiving an error message. We require additional information from these customers in order to complete their application, and will shortly be updating our systems to give much clearer information on what we require from them in order to progress their application," the spokesperson added.

The bounce-back loan program is the latest attempt by government to help small businesses survive the coronavirus lockdown.

More than 69,000 such loans, with a value of more than £2 billion, were granted within the first 24 hours of the scheme being launched, according to HM Treasury data published Wednesday.

The government also has two larger coronavirus loan packages – which were initially criticized for the slow pace at which they are able to lend to companies.

The coronavirus business interruption loan scheme, which launched in March, offers guarantees on 80% of the debt on loans of up to £5 million. More than 33,000 loans worth £5.5 billion have been approved, according to data from industry group UK Finance.

Companies with turnover of than £45 million can apply to the large business interruption loan scheme, which launched on April 20..

--Editing by Ed Harris.

Update: This story has been updated to add comment from Barclays.

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