Firms struggling to access coronavirus loan scheme, says BCC
Almost two-thirds of British businesses do not have enough cash to last three months as firms continue to struggle to access the government’s coronavirus loan scheme.
A British Chamber of Commerce (BCC) survey showed that 57 per cent of businesses polled did not have enough cash to survive past three months and only one per cent had successfully accessed the government’s coronavirus business interruption loan scheme (CBILS).
Eight per cent of businesses had been unsuccessful in their quest to receive a portion of the £330bn government-backed loan programme.
It was revealed by City A.M. yesterday that just 2,022 UK businesses had accessed £291.91m worth of loans through CBILS out of 309,193 enquiries, according to UK Finance.
This translates into an acceptance rate of just 0.65 per cent.
The BCC said that from its survey that “the complexity of the [CBILS] application process and a slow or lack of response from the relevant body” were cited as key reasons why respondents had been unsuccessful in their applications.
BCC director general Dr Adam Marshall said that many firms faced a “cliff edge scenario”.
“We’ve seen a big jump in the number of firms furloughing staff, and many are now starting to apply for access to government loan and grant schemes to keep themselves afloat,” he said.
“Yet our research suggests that support is only starting to reach firms on the ground.”
The loan scheme makes available government-backed loans that are interest free for 12 months to businesses with revenue of up to £45m.
However, there have been numerous reports of banks placing onerous loan conditions on businesses after the first year, such as double-digit interest rates or asking for unreasonable amounts of personal collateral.
The rules for the loan scheme were relaxed on Friday, prompting hopes it would become easier for businesses to secure loans.
Previously, only businesses that could not secure normal commercial loans were eligible for the scheme, however it has now been opened to every business that meets the scheme’s criteria.
Banks are also no longer allowed to ask for personal collateral for any loans under £250,000.
London Chamber of Commerce and Industry chief executive Richard Burge said the banks had not been doing enough up to now.
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.”
Foreign secretary Dominic Raab said at yesterday’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.”