Nearly half of all UK businesses have seen their revenue fall due to the coronavirus pandemic, a new survey has shown, amid calls for government to make it easier for struggling businesses to access loans critical to their survival.
Office of National Statistics (ONS) data found 45 per cent of UK businesses saw revenues drop between 9 and 22 March, as strict restrictions on movement kicked in.
The data comes after banks came under fire from the business community for reportedly pushing struggling companies away from special government-guaranteed coronavirus loans to more profitable, conventional lending products.
After reports that a fifth of all SMEs could go out of business within a month unless changes were made to the loan system, business secretary Alok Sharma said that it was “unacceptable” for banks to make it harder for firms to access the emergency funding.
In addition, last night Sky News reported that chancellor Rishu Sunak is set to announce that the requirement for banks to assess whether companies are eligible for other funding products before allowing them to access the Coronavirus Business Interruption Loan Scheme (CBILS) will be scrapped.
Challenger bank Oaknorth, which is seeking to be added to the scheme, has called for a number of changes to be made in order to ease the pressure on businesses.
The bank said that the current regulations required banks to do extensive analysis of who was eligible for help at a time when resources are already stretched to breaking point.
In addition, Oaknorth said that the business turnover limit should be increased from £45m to £200m, and the maximum loan amount increased from £5m to £10m, to ensure that medium-sized companies, who are too small to apply for the Bank of England’s CCFS scheme, are also protected.
Under the current scheme, any business with a turnover of up to £45m can apply for a £5m loan, with no interest due in the first year.
Broker Funding Options has also called for the government to add more firms to the list of approved lenders in order to deal with the size of demand.
David Keene, CMO, Funding Options, says: “The banking system needs to pull together to help our businesses survive. At present, the government’s CBILS scheme is only helping businesses that are low-risk.
“However, there are a number of businesses out there that normally would be able to access finance, but currently can’t under more stringent lending criteria.
“The key to untying the Gordian knot is to bring more alternative finance providers, B2B marketplaces and other fintech organisations into the solution to complement the big high street banks.”
The ONS survey also found that 27 per cent of businesses had reduced staff levels in the short term, with 46 per cent of companies encouraging employees to work from home.