SNP MPs have led a cross-party campaign to ensure UK Government support for small businesses reaches those that need it during the Covid-19 pandemic.

Kirsten Oswald, who represents East Renfrewshire at Westminster, has written to Chancellor Rishi Sunak, calling on him to “fix” the Coronavirus Business Interruption Loan Scheme (CBILS) to offer more support for “larger and more financially complex” small and medium enterprises (SMEs).

The SNP business convener’s letter has been supported by a coalition of 46 MPs from seven different parties including those on Labour and Liberal Democrat benches.

Oswald has highlighted a gap in the current loan scheme where only a tiny number of big lenders are signed up to administer CBILS overdrafts. RBS and Bank of Scotland are part of the CBILS scheme but not signed up to the overdraft scheme – as well as Barclays and Virgin.

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She is now calling on the UK Treasury to investigate why these major banks are not signed up to provide overdrafts under CBILS.

Oswald said: “Supporting small and medium businesses is crucial to our economy and people’s livelihoods, so it is deeply concerning that only one major UK bank is accredited to deliver vital loans to those who need it most.

“Businesses across the country are impacted by the absence of their banks from these provisions, and it is simply not good enough for the UK Government to ignore this issue while businesses struggle needlessly.”

She added: “The Chancellor must explain why this is the case and investigate why the UK Government’s loan scheme is not delivering the support that these businesses need.

“Colleagues from seven parties across the House of Commons, representing Scottish, English, Northern Irish and Welsh constituencies, have expressed their concern about similar situations to those I’m seeing in my own constituency inbox, so this is clearly not an isolated problem. It’s time for the UK Government to act before it’s too late.”

The calls come after applications opened for a £100 million fund in support grants for SMEs and newly self-employed people announced by the Scottish Government.

The Treasury said it was a decision for individual banks to “deliver the products that they feel will best benefit their customers”.

In a letter to the banking sector, Sunak said: “The priority for all of us – banks, building societies, Government and the financial authorities – should now be to take all action necessary to ensure that the benefits of the measures are passed through to businesses and consumers.

“This will require a willingness to maintain and extend lending despite the uncertain economic conditions. We must ensure that firms whose business models were viable before this crisis remain viable once it is over.

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“Continued communication and co-operation will be paramount over the coming weeks and months. The Bank of England and the FCA will be monitoring the situation closely and will be in regular contact to discuss developments and any issues emerging.

“You all have an important part to play in the UK response to Covid-19 and we know that you will rise to the challenge to support the economy and protect jobs.”

A spokeswoman for Lloyds Banking Group and Bank of Scotland said that alongside its commitment to lend £18 billion this year, a £2bn fund has been allocated for companies to “provide fee-free financing”.

She added: “In addition to the £3bn in existing undrawn overdraft facilities that was already available to businesses, we have approved a further 14,000 overdraft extensions

“We have approved 25,000 capital repayment holidays to help businesses with their working capital challenges and reduce their outgoings.

“We have now approved 3,752 CBILS applications which is 14.9% of the total share across all banks. This has increased from 12.8% last week, showing that we are reducing the backlog of applications and we anticipate this will continue to improve further in the coming weeks.”

An RBS spokesman said: “We have processed over 6,000 new and increased overdrafts for our business customers since Covid began.”