KIS Finance has reported that some small and medium-sized businesses (SMEs) are struggling to access the financial support offered by the UK government in light of the coronavirus outbreak.
According to KIS, many SMEs are finding that banks are not making it easy to get the financial support that they need. “Rather than making the process as quick as possible for companies in distress, the banks are taking this opportunity to cash-in on the crisis by insisting companies apply for a standard business loan first.
“Only if they then fail to meet the normal criteria will they be able to apply for a loan under the Coronavirus Business Interruption Loan Scheme. Even then, there is a lot of uncertainty on exactly what forms of security the banks will be asking for from businesses if they are considered for a loan under the Scheme,” said KIS.
Some lenders have been asking for personal guarantees, explained KIS, which could place the personal property of business owners at risk if their business were to fold due to the crisis.
“Rather than helping companies in line with the government’s intentions, the banks seem to be creating barriers which will prevent businesses from getting the financial support that they so desperately need and the government openly promised.”
Businesses affected by the coronavirus can access loans via 40 lenders who are part of the Coronavirus Business Interruption Loan Scheme, and companies are currently being directed to apply via their normal business bank in the first instance.
KIS added: “Given the unprecedented nature of the crisis and the lasting impact that this is likely to have on the UK’s economy, shouldn’t the banks be offering all affected viable companies access to the same level of support?
“Offering an interest-free period and payment holiday in line with those provided under the Scheme would create a level playing field and provide the support that businesses will desperately need to survive the current crisis.
“Clarity is therefore urgently needed to ensure that all banks are treating businesses fairly, and in accordance with the intentions set out by the government, rather than focusing on generating their own profits.”
