Chancellor to intervene on emergency loans to small business

Responding to Wednesday's coronavirus update from Alok Sharma, where the business secretary promised the Chancellor will come forward with additional measures to help small firms trying to access coronavirus support, the Federation of Small Businesses (FSB) national chairman Mike Cherry said that the Chancellor's intervention on emergency loans is vital.

“A lot of members approaching banks about emergency loans are met with one of two issues. 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," Mr Cherry said. 

Explaining that the job retention scheme is "a great one", he opined that the issue is that 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 cash flow, then we need to see the Treasury working with lenders to ensure they’re pulling out all the stops to make emergency loans available. The initial feedback we’ve had from the frontline about the interruption loan scheme has not been positive," Mr Cherry said.

“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."

He revealed that billions 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,” Mr Cherry concluded. 

“We look forward to the Chancellor’s intervention.”

Addressing media on Wednesday, Mr Sharma issued a warning to banks, adding that it is “completely unacceptable” if banks are refusing funds to businesses in financial difficulty.

“The chancellor, together with the Bank of England and the Financial Conduct Authority, wrote to the chief executives of the UK banks to urge them to make sure that the benefits of the loan scheme are passed through to businesses and consumers. It would be completely unacceptable if any banks were unfairly refusing funds to good businesses in financial difficulty," Mr Sharma said, adding that the government will work with the banks to do "everything they can" to support the businesses and people of the UK.