A FIFTH OF SMALLER UK FIRMS WILL “RUN OUT OF CASH” WITHIN 4 WEEKS

Alfie Brown

Many firms have reported that banks have refused them emergency loans.

Nearly a fifth of all small and medium-sized businesses in the UK are unlikely to get the cash they need to survive the next four weeks, in spite of unprecedented government support.

That’s according to research from a network of accountants which suggests between 800,000 and a million firms nationwide may soon have to close.

Many firms have reported that banks have refused them emergency loans.

The banks say they are following the rules set out by the government.

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Banks under fire for coronavirus loan tactics:

Chancellor Rishi Sunak said two weeks ago that businesses would be able to walk into bank branches and discuss Coronavirus Business Interruption Loans (CBILs) of up to £5m to help them survive the shutdown.

The promise from the chancellor was that “any good business in financial difficulty who needs access to cash to pay their rent, the salaries of their employees, pay suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms”.

However, thousands of struggling firms can’t get through to their banks by phone or, when they do, are being told by the banks they’re not eligible.

Bank say 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 a property.

Businesses wanting to borrow more than £250,000 are being told by banks that directors must sign personal guarantees. That means if the loan goes bad owing to a prolonged shutdown, their personal property is on the line.

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