>>> Europe Lending

The Wrong Prescription for Covid? Does CBILS Have the Right Prescription or Will it Kill the Patient?

As we learned from Trump last week if you use the wrong medicine the patient will die. Amazingly antiseptic, while highly efficient at killing coronavirus on surfaces, is more likely to kill a patient if taken intravenously – or glugged down!

Loan as Stimulus
However in the USA they have already created PPP a (Paycheck Protection Program) ‘stimulus’ package – which has some unusual features beyond normal lending. These are ‘forgivable’ loans that are 100% guaranteed by government.

On Friday I was struck by my good friend Lawrence Wintermeyer’s thoughtful contribution to the Fintech Times debate on ‘Can Fintechs Save the UK Economy.’ Especially when asked about a possible 100%
government loan guaranteed; the observation that in these extraordinary times ordinary measures, ordinary lending, is probably not appropriate –  and almost certainly not the best that we can do.

Right now we need the best that we can do. Tens of thousands, probably hundreds of thousands, of businesses are at stake – and time is running out. Like with the rescue of Notre Dame Cathedral on the day
the fire breaks out the first priority is to put the fire out and preserve as much as possible for reconstruction later.

Covid-19 has set fire to our economy. Savings are being used up instead of income. Small businesses, who have smaller reserves, are being hit first and hardest because they carry little fat. We need to put this fire out now, so that we have as much as possible to work with come the post-Covid reconstruction.

It has been observed that the cure will be worse than this disease. That the economic crisis the Pandemic inflicts on the world, and on us all, will cause more damage than the virus itself. This seems to be inevitable – to at least some extent. But smart actions now can limit the damage. By taking smarter actions later we can speed the reconstruction on which we will all rely. If we do not do this we are likely facing a catastrophe similar to, or worse than, the great depression of the 1930s.

Stimulus, Loans and Life Support
Imagine if Boris Johnson, wheeled onto the hospital ward having taken a turn for the worse, and the doctor in charge called for a stimulus. I’m sorry, a stimulant. A nice big dose – no fiddling small doses. When
what he needed, and thankfully got, was intensive care. Making sure he got the oxygen he needed, and the help he needed to get it, for the duration – so that he could recover.

Far too often in life and economics, as human beings we are guilty of oversimplified on/off, fast/slow, forwards/backward; bipolar thinking. The accelerator or the brake. This is particularly so in the case of economics. Even the simplest vehicles have a steering wheel, gears and a handbrake. But in economics, governments tend to have very limited tools to stimulate the economy or dampen it. Speed up or slow down.

This is bad enough in normal times – it’s potentially disastrous in the corner that Covid now has us. Because the treatment is likely to kill the patient unless it is drastically modified. The normal stimulus tools are stimulants. Loans are stimulants – in most circumstances to be paid for out of future profits generated as a result of the growth made possible by the loan. The additional income and therefore profits making the loan affordable.That is what they’re good for.

What we have right now is the reverse. Stimulants being offered to small businesses driven to the edge, drained of reserves by Covid-19, and in need of life support to get through to the other side. They are inevitably less healthy now than at the outset of the pandemic. They will inevitably leave the crisis, unless supported, weaker still – unless they expire in the process.

To write this in a business plan, for a bank – as they’re requesting – is of course futile. No commercial bank will take even a smidgen of risk when they can see no prospects of repayment. When the timeline is uncertain when they nor we have any way of knowing whether the loan will sustain the business to outlast the crisis or the reverse. Worse still, this treatment will inevitably burden the enfeebled patient just at the point when it might recover.

Life Support, not Stimulus
What is really needed is life support for these small businesses – who provide most of the jobs in the UK.
The US programme includes ‘forgivable loans’ – loans that don’t have to be repaid provided they are used for the purposes of survival. Little matters if these seem to be renamed grants that can be clawed back, they seem to be a better form of support – rather than a death sentence, after having extended the agony.
But what we really need to do is change our mindset. As Lawrence Wintermeyer pointed out, these are not normal times, they are extraordinary times. We need to be clear what our objective is – not right now to be trying to stimulate the economy for growth. That’s insane. But to be doing all we can for our pubs and shops, self-employed people, micro businesses and SMS to enable them to survive the financial nuclear winter brought on by Covid-19. So that, for the benefit of us all, the economy can be reconstructed – revived, from a far higher base than one that could lead us to a depression deeper than the ‘Great Depression’.

Killing the Patient
This will not be commercial lending as usual. That stimulus, unmodified, will kill the patients it seeks to save.
In normal times the printing of money, debasement of the currency is dangerous. Not least because it can run out of control. Governments can be tempted to treat it as the magical elixir for all ills – with the results we know about all too well..Because it takes, invisibly, a little away from us all by debasing “the pound in your pocket,” and puts it to use elsewhere.  The world economy is swimming in debt – drowning. Covid is choking off the bond markets and much else. That’s not going to get any better anytime soon. Yet more debt will sink not just the banks but likely the world economy.

Drastic times call for drastic measures.  Most of us are already sick and tired of been told that it is an unprecedented crisis, not least because it’s obvious that it is.

What we need is to find and use the right tools to tackle it – fast. We must put the fire out by getting the right funding to these smaller businesses fast.

Every day that goes by more jobs and livelihoods die – making it harder to recover – and our future and that of our children is at stake.

Can #FintechsSaveUK Economy – alone? No. But together we can.

It’s #TimeForChange. For smarter action

OPEN LETTER TO THE Prime Minister, Boris Johnson MP
Surviving the Corona Crisis: The prescription for the SME and Micro 50% Economy 
Dear Prime Minister
You have rightly praised those who nursed you, bringing you back from the edge when “it could have gone either way”. Highly skilled professionals, with a range of treatments and techniques at the fingertips ready to deploy them – but only when needed.
The economy, as you well know, has been badly hit by Covid-19 – and we all know this is going to get considerably worse before it can get better. The smallest firms which make up more than half of the economy and provide more than half of the jobs is hit hardest. This is where support is most urgently needed. This is where it is proving the slowest to reach.

I have written to you previously, more than 3 weeks ago, detailing how modern digital technology, fintech, can be used to accelerate this. I still await a reply that would harness this
capability, which now stands ready. However today I write to ask you what might have happened at that point in St Thomas’ Hospital a week or two ago where you offered a stimulus – the medical equivalent of a
commercial, repayabler, loan. Rather than the unstinting support and care that brought you through your personal crisis, on life-support, enabling you to recover and, soon we all hope, play your full part again.

The answer is the wrong treatment would, most probably, have killed you. What you needed was life support. Oxygen. What our shops and pubs, self-employed tradespeople, small manufacturers and SME’s more generally need is not a stimulus but life support.
Which is why we now need CBILS Direct. Money direct from the Bank of England, flowing quickly now to keep these businesses alive. Moreover these need to be turned into, as quickly as possible, forgivable loans – directed grants in other words – so as not to overburden and kill the patient.

As I’ve explained in the attached piece published today in Fintech Times. The first priority, as in any crisis, however is to put out the immediate fire, prevent the dissolution of these businesses. Fintech stands ready to do just that – and can speed things up from weeks to just days – with lending decisions in 24-48 hours, at scale, via the (fully regulated yet purpose made) MoneyHelicopter platform.

The rest can take a little longer – but will, assuredly, be needed for before reconstruction.

How much better to bite the bullet now on:
● Forgivable loans – or at least such criteria for later
● 100% Guarantees
● Bank of England bailout – rather than debt

So restoring confidence in a, more direct, CBILS system that is, currently, the wrong medicine for many. That is unable to reach the majority of patients with life support – and in a form that could kill as many as cure?

We stand ready to assist.


Barry E James
Chair BBFTA Covid-Response Fintech Taskforce
The British Blockchain & Frontier Technologies Association


  • Barry E James is a founder of public engagement initiative RemakingMoney.com and founding chair of the BBFTA.org (British Blockchain and Frontier Tech Association). He is an author and columnist, notably for CityAM's CryptoInsider, and is a visiting fellow at the University of Portsmouth Business School.

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