Monday, April 13, 2020
Are the banks hindering aid process for businesses?
We have seen this scenario before: big banks having been bailed out by the government, then failing to live up to expectations to support businesses through a downturn.
Of course they deny it, and certainly, while I was an Assembly Member during the post-2008 crash, I was told by one bank that they were doing all they could to help companies struggling with liquidity problems. The reality was very different, as evidenced by cases I took up on behalf of some of the businesses in my region.
Now, here we are again. The Government has set up a scheme to help small and medium-sized businesses with loans and other financing of up to £5m each, and yet it has emerged that just 4,200, or 1.4%, of the estimated 300,000 firms that sought help online have received rescue loans.
The Guardian reports that tens of thousands of firms are understood to have made formal applications, but amid accusations of excessive bureaucracy and a reluctance among lenders to make loans, only a fraction have been given the go-ahead. We even got to the stage, on 3rd April, when Alok Sharma, the business secretary has had to ban banks from asking for personal guarantees from small businesses seeking help.
On Wednesday the British Chambers of Commerce said only 1% of firms responding to its survey had managed to secure a loan under the scheme, while 7% had received one of the grants offered to small businesses by the Treasury. It is little wonder that thousands of companies are on the verge of collapse.
Of course they deny it, and certainly, while I was an Assembly Member during the post-2008 crash, I was told by one bank that they were doing all they could to help companies struggling with liquidity problems. The reality was very different, as evidenced by cases I took up on behalf of some of the businesses in my region.
Now, here we are again. The Government has set up a scheme to help small and medium-sized businesses with loans and other financing of up to £5m each, and yet it has emerged that just 4,200, or 1.4%, of the estimated 300,000 firms that sought help online have received rescue loans.
The Guardian reports that tens of thousands of firms are understood to have made formal applications, but amid accusations of excessive bureaucracy and a reluctance among lenders to make loans, only a fraction have been given the go-ahead. We even got to the stage, on 3rd April, when Alok Sharma, the business secretary has had to ban banks from asking for personal guarantees from small businesses seeking help.
On Wednesday the British Chambers of Commerce said only 1% of firms responding to its survey had managed to secure a loan under the scheme, while 7% had received one of the grants offered to small businesses by the Treasury. It is little wonder that thousands of companies are on the verge of collapse.
