The UK government has issued a warning to banks, following concerns that millions of businesses could collapse if denied emergency loans during the coronavirus lockdown.
Business secretary Alok Sharma said it would be “completely unacceptable if any banks were unfairly refusing funds to good businesses in financial difficulty”.
He explained that the chancellor, Rishi Sunak, together with the Bank of England and the Financial Conduct Authority had urged banks to make sure that the benefits of the Coronavirus Interruption Loan Scheme were passed through to businesses and consumers as quickly as possible.
“Just as the taxpayer stepped in to help the banks back in 2008, we will work with the banks to do everything they can to repay that favour and support the businesses and people of the United Kingdom in their time of need,” said Alok.
“Of course, this is a brand-new scheme and, as with all new schemes, it will not be perfect from the outset.
“We are listening all the time. And in response to concerns that we’ve heard from businesses, we are looking at ways in which we can ensure they get the support they need. The chancellor will be saying more on this in the coming days.”
The national chairman of the Federation of Small Businesses (FSB), Mike Cherry, said a lot of its members had been met by two issues when approaching banks about emergency loans.
“Either lenders are trying to push them towards standard, expensive products – demanding personal guarantees – or the banks are simply not responsive: they say they’ll call back and the call back never comes.
“Many small employers had to pay staff last week. The job retention scheme is a great one, and one we fought hard to secure, but firms can’t claim through it until later this month.
“If the advice for those with no revenue coming in is speak to your bank about cashflow, then we need to see the Treasury working with lenders to ensure they’re pulling out all the stops to make emergency loans available.”
Mike added that initial feedback the FSB had had from businesses about the interruption loan scheme has not been positive.
“We can’t have a situation where banks are approached by successful small firms and lenders offer up business as usual products. This is not business as usual. Millions of fantastic small firms are facing collapse.
“They were promised interest-free, fee-free, government-backed support from banks. Many of them are in urgent need of it today, and it’s not being made available. We look forward to the Chancellor’s intervention.”