Concerns are growing about the accessibility of the government’s coronavirus business loan scheme amidst ongoing claims that many small and medium businesses are being denied funds.
Just 1,000 businesses, out of almost six million British SMEs, have been granted loans as a part of the £330bn coronavirus business interruption loan scheme (CBIL).
The government-backed loans are available interest free for 12 months to businesses with revenue of up to £45m that are struggling with the fallout from Covid-19.
However, there have been numerous reports of banks placing onerous loan conditions on businesses after the first year such as double-digit interest rates.
The rules for the loan scheme were relaxed on Friday, prompting hopes that it will become easier for businesses to secure loans.
It comes as the British Chambers of Commerce said last week that more than half of the country’s SMEs were at risk of shutting their doors without urgent economic relief.
Federation of Small Businesses (FSB) chair Mike Berry said: “[Our members] were promised interest-free, fee-free, government-backed support from banks but, until now, the process for securing it has proved nightmarish for many.”
London Chamber of Commerce and Industry chief executive Richard Burge said the banks were flat out failing to help the country’s small businesses that are at risk of going bust.
He said: “Banks have two simple tasks. Both seem to be defeating them.
“First, to keep companies afloat through bridging finance as they wait for government support.
“Secondly, provide the only route to CBIL funding from government. They are doing neither effectively.”
Chancellor Rishi Sunak and Bank of Governor Andrew Bailey wrote two weeks ago to the country’s largest banks to urge them to “do their part” and facilitate loans on good terms.
Foreign secretary Dominic Raab said at today’s daily press briefing that the Treasury was working with the banks to ensure the taps are turned on for the country’s SMEs.
“The Treasury ministers are in regular contact with banks,” he said.
“We’re looking what they need and critically how do we get finance to the businesses that are viable or struggling with the challenge of coronavirus.”