Bailed out banks must support businesses through pandemic - Jayne Dowle

Surely the time has come for someone to be put in charge of ensuring that the small businesses which form the backbone of Britain receive the financial support they need to endure the coronavirus crisis.

From IT specialists to dog groomers, from florists to car mechanics, and yes, even accountants themselves, these are just some of the firms which make us a thriving “nation of shopkeepers”. What kind of nation will we become if such businesses have to shut up shop for good?

No-one seems to be fighting their corner. And can I make another plea? Please can that minister be someone other than Work and Pensions Secretary Thérèse Coffey?

Questioned on Sky News about why thousands of small businesses are finding it impossible to access funding from the Coronavirus Business Interruption Loan Scheme (CBILS), promised by Chancellor Rishi Sunak more than three weeks ago, she simply repeated the familiar mantra: “Stay home, save lives.”

It was hardly an adequate response.

As yet, there are no figures for how many companies have actually enquired about a loan, but the banks are saying that one in five applications are successful. What’s happening, in that case, to the vast numbers who fail to meet the criteria?

According to research by the lobbying group UK Finance, banks have so far granted loans to only 6,020 applicants, totalling £1.1bn. Just over 6,000? The Federation for Small Business alone, a national non-political organisation representing the interests of traders and entrepreneurs, has around 200,000 members. I’ll leave you to do the maths on that one.

The banking industry can’t blame the Government here; a key point of the rescue package is that it’s backing 80 per cent of the value of the loans, therefore reducing risk for lenders.

Clearly, those in charge of lending have short memories. Who bailed out the banks during the 2008 financial crisis? The Government, injecting a total of £45.5bn into the Royal Bank of Scotland, for instance, between October 2008 and December 2009 to keep it afloat.

The time has come for financial services to return the favour; by making it so difficult for businesses to access emergency funding, they are undermining government efforts to minimise economical fall-out.

“There’s still a lot of work to do,” says Mike Cherry, chairman of the Federation of Small Businesses. “Many members tell us it’s difficult to get to the formal application stage – banks are still slow to respond to CBILS enquiries.”

Some business owners say they have been required to fill out dozens of pages of forms asking detailed questions. It’s often impossible to speak to a banking adviser for guidance, promises to return calls are ignored and emails go unanswered or receive an automated response.

Mr Cherry is calling for banks to cut down the time period by pre-filling forms, and speeding up approvals by taking a more pragmatic approach to checks for credit-worthiness. It would help immensely if he had the heft of a government minister behind this.

My husband and I couldn’t even face picking up the phone. We are both self-employed sole traders; I write for a living, he’s a builder and our earnings have been severely impacted by lockdown. Technically, we might qualify.

However, I knew that there would be no point even applying for this particular kind of support.

Neither of us wish to borrow upwards of £25,000, generally the starting point for finance under the scheme. And also, we can’t prove a viable plan going forward to repay what we borrow; at this stage we have no idea what our working worlds will look like when lockdown finally lifts.

Still, in many respects, we are fortunate. We don’t have loyal staff to make provision for, or business premises to pay for. We’re just doing what we can to keep food on the table and spirits up.

That doesn’t stop us worrying about our many friends who simply don’t know how their companies will survive. It means we risk sacrificing untold numbers to ill-health caused by immense financial anxiety. We all accept we will lose certain things in this unprecedented time. It is, however, unfair for anyone to face jettisoning their livelihood, or their life, because the banks won’t play ball.

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James Mitchinson

Editor