Who benefits? The Lender.
The rates can be much higher than 7%, as it is risk related and the loan requirement tends to be required as a result of commercial pressure. It is a trade-off for small business owners between managing your risk if the business goes bad, and reducing the cost of borrowing to make it more likely to succeed.
For companies turning over between £200,000 and £500,000 the marginal cost of borrowing above the BBLS cap is a vertiginous cliff, building excessive future costs into the business.
What can the Chancellor do to help? Allow small companies to keep their BBLS loans and access CBILS for their surplus funding requirement. The current situation is a choice between a rock and a hard place for small businesses, whilst incentivising lenders in a way that actually increases the chances of default.
