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Banks have just reported business interruption loans have doubled with more than £1bn lent to 6,020 businesses@and this has been welcomed by @RishiSunak . But there are well over 5 million businesses and we know nearly a million will run out of cash within a month.
This is nowhere near fast enough to reach businesses. If banks are doing their utmost and working through the Easter Weekend to get loans to just 0.1% of the UK's businesses, it's going to take months to get this cash out.
I'm told banks are still having to approve the loans the traditional way - with the relevant manager's signature on paper. Yet technology exists, approved by regulators, that can do electronic due diligence and turn around loan applications in minutes not days.
If the government underwrote 100% of the loans up to a certain limit, it would relieve banks of most of their normal paper-based underwriting process which they have to follow because of regulations. Then they could partner with Fintechs to scale up rapidly.
@hmtreasury is worried about the risk of fraud if it underwrote smaller loans like the Swiss are doing. But the Swiss have done more than ten times the loans in a tiny fraction of the time.
The obsession with the risk of fraudulent applications is akin to Mervyn King's obsession with moral hazard in 2007 - when the Bank of England was slow to act. Yes, it's a risk - but surely the greater risk right now is unemployment rising even faster than it has been?
