One MILLION firms set to shut as banks refuse vital coronavirus loans to businesses and phone lines jam
One MILLION firms are set to shut because banks are refusing to give them the loans they need to survive.
Firms all over Britain have revealed their fury after being either refused emergency loans, or left unable to even speak to banks on the phone.
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Just two weeks ago Chancellor Rishi Sunak had promised businesses Coronavirus Business Interruption loans of up to £5m to help them survive.
With most branches closed, thousands of firms are now struggling to get the cash they were promised just a fortnight before.
Those that are open are then limiting the number of customers that can be in a branch at any one time, making it even harder for people to get the help promised.
Companies struggling to stay afloat have complained they couldn't get even get through on the phone, and those that did were told the money will take weeks they can't afford.
Mr Sunak had written to UK banks last week urging them to lend to customers as much as possible and be flexible about loans.
Sources said that cash had "very much gone out the door" and banks are understood to be being told they must not demand personal guarantees on loans for small businesses either - or use it as a reason not to lend them cash.
Despite this, companies are still being issued with demands they cannot meet.
Engineering group Belgrave & Powell revealed they had struggled to get the funds.
Boss Steve Lord said: "I was heartened and astonished to see the unprecedented help that was announced by the Government two weeks ago.
"But we put one of our most senior people on it and as each day passed it was disappointment after disappointment.
"It seems to be that if you are lucky you are banking with the right party, if you're not lucky you'll end up having to close your business."
Jewellery company boss Peter Jackson revealed his successful company was refused a loan because it made a loss last year despite being on course to make a profit in 2020.
He explained: "I thought the whole point of the loans was to help business like mine stay afloat. But they're not going to help."
Mark Fuller, who owns popular celebrity haunt Karma Sanctum in Soho explained he could not apply for funds as he was unable to guarantee he could pay it back in six months.
He said: “The loan is under normal business conditions, which is fine but then don't suggest otherwise.
“I have already been told by the Government and Barclays that the only way to receive a loan is by cutting my staff.”
Banks were inundated with complaints on Twitter from those trying to access the loans, only to be on hold for hours.
One user wrote to Barclays saying they "can’t apply for a loan online, it tells me to call a number, was on hold for 2 hours".
Another claimed after ringing RBS they were "cut off after holding for 2 hrs, for the 2nd day in a row."
If these businesses can't stay open with emergency loans they are going to have to let go thousands of members of staff.
The Government had promised to pay businesses up to 80% of their wages - but that support won't come until at least the end of the month.
The banks insist they're following rules set by the government, which mean firms can only get the emergency loans if they can't borrow in a normal commercial way, like borrowing against the value of their home.
This means businesses wanting to borrow more than £250,000 are being told to sign personal guarantees, meaning they could be forced to hand over their property.
The study has now warned a fifth of all small and medium-sized businesses in the UK are unlikely to get the cash they need in time.
Kirsty McGregor, founder of the Corporate Finance Network, "Small and medium-sized businesses employing less than 250 people employ most of the workforce - 23 million people.
"We could lose up to a million of them in the next month or so. And it will be irreversible which will be catastrophic for the UK economy."
The Mayor of London Sadiq Khan also laid into the banks, demanding they "step up" to help small and medium-sized businesses survive during the coronavirus pandemic.
The figures come from a network of accountants serving more than 12,000 small and medium-sized businesses.
They found 18 per cent of their clients were unlikely to get access to the cash they need to survive a four-week lockdown.
It comes after the banks were accused of trying to take advantage of the situation with massive interest rates and demands to take people’s property if the business goes under.
A Treasury spokesman said: “Banks are ready and able to offer support to their customers who are impacted directly or indirectly by COVID-19.
"We encourage anyone concerned about their overdraft to contact their provider.
"Financial Conduct Authority rules require firms to make appropriate interventions if they identify that a customer is in financial difficulty.”
There are now 25,150 confirmed cases of coronavirus with 1,829 deaths in the UK.
It comes as Piers Morgan ripped into ministers for failing to explain WHY Britain can't test as many people for coronavirus as Germany.
The Good Morning Britain host lost his temper with Robert Jenrick, who couldn't explain why the UK wasn't able to get 500,000 tests done like seen in other countries.
The Chancellor's extra measures announced last month included:
- £350billion in guaranteed loans for businesses - equivalent to 15 per cent of GDP
- Three month mortgage payment holiday for struggling homeowners
- Loans of up to £5million for small businesses - interest free for six months
- Big companies can get low cost Bank of England loans
- Cash grants of up to £25,000 for pubs, restaurants and other hospitality and retail businesses
- A one-year holiday from business rates for retailers
- Pubs and restaurants to become takeaways without planning permission
- Businesses insured against pandemics can claim
- Another £3.5billion for Scotland, Wales and Northern Ireland for businesses
- Pledge of more money for the NHS if and when it's needed
- Work with unions and businesses over sick pay, workers' rights and welfare benefits
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