Thousands of UK businesses are still waiting for £10bn of government grants to be handed over as calls grow louder for the Treasury to expand its set of coronavirus relief measures.
Figures from the Local Government Authority show that £1bn of grants have been awarded to 100,000 small businesses, but that many more are still waiting to get the vital funds.
The government has set aside £20bn for grants funding and rates relief for businesses in the retail, leisure and hospitality industries.
The grant money, available as either £10,000 or £25,000 payments depending on the size of the business, has been given to local authorities to distribute to eligible businesses.
However, some local authorities have been more efficient than others in providing the funds.
Federation of Small Businesses (FSB) advocacy director Craig Beaumont told The Times that this was a “crunch week” for the grant scheme, with thousands of businesses desperately needing access to funds to stay solvent.
It comes as the Treasury has been facing calls to alter its coronavirus loan scheme for embattled businesses.
Business secretary Alok Sharma revealed yesterday that just 4,200 loans worth £800m had been awarded through the coronavirus business interruption loan scheme (CBILS).
There have been an estimated 300,000 enquiries for the support scheme, which sees banks provide government-backed loans at no interest for the first 12 months.
Some groups are now calling for the Treasury to guarantee 100 per cent of the loans instead of 80 per cent, like in Germany and Switzerland, ensuring the government would cover all losses if businesses cannot repay the debt.
Mike Cherry, FSB chairman, told the Telegraph that this change could ensure that banks lend out more money to businesses struggling through the Covid-19 crisis.
“Switzerland has had a lot of success with the straightforward application process attached to its state-backed loan initiative – that could be a model to consider in future if last week’s changes fail to create any real traction,” he said.
Martin Bellamy, chief executive of merchant bank Salamanca Group, also backed the call for the 100 per cent of CBILs loans to be underwritten.
Speaking to BBC Radio 4 today, he said: “The fundamental change that needs to occur is that the central bank is going to have to agree to underwrite 100 per cent of these loans so that the authorised banks that are processing the CBILS applications are able to lend in a manner that they are not able to do at the moment.
“I do think that there are a number of structural problems that need to be urgently addressed so that SMEs can make successful applications because at the moment there are a large number of applications or enquirers but there is very little liquidity being provided to small businesses.”
Sharma said at yesterday’s briefing that he had been urging the country’s largest banks to work in the national interest and provide loans to businesses at pace.
“They understand that and banks know on this occasion they have to be part of the solution and they want to be part of the solution,” he said.