The Data & Marketing Association (DMA) is calling for banks to remove the personal guarantees from the coronavirus business interruption loan (CBIL) scheme, after receiving feedback from its member organisations which expressed concerns about applying for a CBIL.

Just one business that gave feedback has spoken of a positive experience with the scheme, while many more were ‘shocked’ by the personal guarantees and interest rates they are being asked to agree to. Indeed, many member organisations the DMA has spoken with shared correspondence with leading banks – including Barclays, HSBC and Lloyds – asking for personal guarantees.

CEO of the DMA, Chris Combemale, said: “When the CBIL scheme was first announced, many of our member organisations across the UK were hopeful. They believed, like us, that the scheme would provide the essential cashflow required to survive the current crisis. The businesses we’ve spoken to expected the 80% guarantee to mean just that. For instance, a loan of £100,000 would have 80% guaranteed by the government without the small business owner needing to guarantee the loan personally. However, that doesn’t appear to be how many banks are implementing the scheme.”

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

The DMA is calling on the UK Government and major banks to take immediate action, clarifying these key issues for businesses.

Combemale added: “None of the SME member businesses that we’ve spoken to would be able to accept a loan on the terms banks are currently offering. Instead, many would be forced to choose insolvency, leading to the loss of tens of thousands of jobs across the UK’s data and marketing industry. We are calling on banks and the UK Government to see sense and work collectively to ensure that 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 put in place during this challenging time for people across the UK. It’s also important to recognise that some banks have not been asking for personal guarantees and that all the banks are doing a huge amount to help customers – through mortgage holidays and help around card fees.

“That said, the DMA is calling strongly for the banks to remove the personal guarantees related to the CBIL scheme, to ensure the UK’s thriving SME community can survive this crisis too.”