FSB Update: Small firms say expected interruption loan changes mark “big step forward”

Added by Love Business East Midlands | 3 April 2020

UPDATED: 3 April 2020

Responding to reports that the Government is set to unveil a raft of measures aimed at improving small business access to the Coronavirus Business Interruption Loan Scheme (CBILS), Federation of Small Businesses (FSB) National Chairman Mike Cherry said:

“Time and again we’ve heard from members who’ve approached their bank seeking an emergency loan, only to be offered anything but. Many small businesses have just had to pay monthly wages and national insurance bills. They also have many other outgoings that they need to pay, today.

“They were promised interest-free, fee-free, government-backed support from banks but, so far, the process for securing it has proved nightmarish for many.

“Removing the need to be offered standard products first – with an interruption loan as an afterthought – would mark a big step forward. So too would be ensuring small businesses can qualify for an emergency loan application on the basis of one simple criterion: whether or not you’ve been negatively impacted by the spread of coronavirus is the only question that counts at this juncture.

“We also hope to see the need for personal guarantees ruled out where smaller loans are concerned. These are business loans being sought at an incredibly difficult time – borrowing should be against business, not personal, assets. Loans to the smallest businesses should be pushed out of the door and into bank accounts, now.

“Banks should also be pushed to exercise restraint when it comes to setting the rates that will apply on these loans once the initial twelve months is up. No one should be profiteering from these loans which are not standard commercial transactions, but survival mechanisms.

“There are still some questions that need to be answered by the banks here, not least around how many interruption loans have been sought and how many of these enquiries have translated into meaningful support. We would like to see weekly updates on these numbers. We’re all in this struggle together. Transparency and accountability are key.

“Taking on more debt is a daunting prospect for many smaller businesses in this climate – so we are keen to continue our constructive engagement with government around how debt can be repaid in a sustainable way.”

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