British banks have been told to put their shoulder to the wheel and get lending to businesses across the country.
Business Secretary Alok Sharma urged lenders to “repay the favour” from financial crisis by supporting the economy through the coronavirus pandemic.
“We know high street banks are working really hard to support the country through this period,” Sharma said on Wednesday 1 April.
“It will be completely unacceptable if any banks were unfairly refusing funds to good businesses in financial difficulty.
“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.”
The comments came during the government’s daily Downing Street coronavirus briefing and follow criticism of banks over their handling of government support loans.
The government last month promised to underwrite £330bn of loans to businesses to help them survive the economic fallout of the coronavirus pandemic. The Coronavirus Business Interruption Loan Scheme (CBILS) is being administered by the British Business Bank through 40 financial institutions, mostly leading banks.
“Time is of the essence for most businesses which have seen their operations fall off a cliff overnight,” a leading accountant said last night.
“The banks are offering them their commercial products at 3-4 times commercial rates and available in 45 days. Something needs to be done now to bridge the gap on funding and deliver funds to companies this week to avoid businesses going bust.”
He went on to say that any businesses that had made a loss in 2019 were also having their loan applications rejected “even with a sound, commercial reason for the loss.”
“Just because a company made a loss last year does not mean they are not viable,” he said.
Sharma said on Wednesday that he knew CBILS was “not going to be perfect from the outset” but added: “We are listening all the time.”
He hinted that the chancellor would make a further announcement on support for businesses in the coming days.
Sharma also flagged £22bn of support being given to businesses this week in the form of business rates relief and grants for small businesses. This scheme means any SME who is eligible for Small Business Rate Relief or Rural Rate relief will receive a £10,000 grant from their local authority this month.
Taken and amended from the original: Coronavirus: Banks told to ‘repay the favour’ from 2008 with support
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