UK should consider 100% state guarantee for small business loans, banks say

LONDON, April 15 (Reuters) - Britain's government should
consider fully guaranteeing small emergency loans to businesses
to speed up processing, rather than requiring banks to take on
some of the risk, Britain's banking industry trade body told
lawmakers on Wednesday.

Banks are under pressure to speed up the granting of loans
to companies trying to stay afloat during a national lockdown to
slow the spread of COVID-19.

Stephen Jones, chief executive of UK Finance, told lawmakers
that checking the ability of companies to repay a loan takes
time compared with the system in countries such as Germany,
where similar loans are 100% state-backed.

The biggest backlog was for loans of less than 25,000
pounds, and issuing these would be faster if the government did
not require banks to take on 20% of the risk, Jones said.

Jones said banks were making progress on the backlog, and
that loosening the rules would increase the risk to taxpayers.

"I would urge a few more days of patience... before any
re-engineering of the scheme is done," Jones he told
parliament's Treasury Select Committee.
(Reporting by Huw Jones and David Milliken)