Lloyds bank blasted by top accountant over emergency loan scheme

Lloyds Bank has been lambasted by one of the UK’s leading accountants for demanding that directors applying for the government’s emergency small business loans must provide details of income and expenditure.

Clive Parritt, the former president of the Institute of Chartered Accountants of England and Wales, has written to LLoyds chief executive, Antonio Osorio, describing the bank’s demand as “illogical and totally irrelevant.”

He says Lloyds Bank is taking a “ridiculous approach” to applications by company directors to the Coronavirus Business Interruption Loan Scheme.

One of the questions on the Lloyds form requires that directors state: “Personal income and expenditure document completed for all directors/shareholders of the business.”

In the letter seen by Reaction, Mr Parritt says: “The loan is to a company, guarantees are specifically excluded so the income and expenditure of directors and shareholders is of no consequence, is intrusive and is unlikely to be easily available.”

He goes on: “Is this a Government requirement or another effort by banks to avoid helping small business?”

The letter to Lloyds’ Osorio has also been copied to the Chancellor, Rishi Sunak, the Treasury team, the British Business Bank, which is helping with the loans, and to the Institute of Chartered Accountants.

Mr Parritt, who was chairman of Baker Tilly accountants for many years, is now actively involved with a number of small companies.

His criticism follows a wave of anger against the manner in which the high street banks, and other lenders, have approached the government’s £330 billion rescue operation to underwrite loans to Britain’s businesses, small and large.

The Chancellor was forced to overhaul parts of the CBIL scheme, particularly those effecting the UK’s six million SMEs which have found it almost impossible to get their loans processed or approved and whose cash flow situation is the most perilous.

Banks were ordered to ditch the previous rules which said lenders could only use the CBIL scheme in situations where they could not provide a facility under normal commercial terms.

The aim of the CBIL scheme is to provide around 40 lenders with a government-backed guarantee of 80 per cent on losses that may arise on facilities of up to £5 million.

The loans are on offer for businesses with turnover of up to £45m.

As of yesterday, only  2,022 loans out of nearly 300,000 applications have been approved to the UK’s small and medium companies.

There have been around 300,000 applications so far.

According to UK Finance, the trade body for the banking industry, some £291.9m had been lent through CBILS via the coronavirus business interruption loan scheme (CBILS).

UK Finance reports that 52,710 phone enquiries and 256,483 online enquiries have been made.