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.
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The government last month promised to underwrite £330bn ($408bn) 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 40 financial institutions, mostly leading banks.
Banks have been criticised for asking business owners for personal guarantees on the government-backed loans, which meant entrepreneurs could lose savings and investments if their businesses fail. Business owners and advisers have also reported delays in securing loans from banks.
“Time is of the essence for most businesses which have seen their operations fall off a cliff overnight,” Richard Churchill, a partner at tax advisory Blick Rothberg said on Wednesday.
“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.”
Churchill said all 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 the coronavirus business interruption loan scheme 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.
He extended his “heartfelt thanks to all of the businesses up and down the country” who are keeping staff on and working to keep the economy alive.
It came as the UK recorded its highest daily death toll linked to the novel coronavirus. 563 people have died from COVID-19 in the last 24 hours, the government said on Wednesday. 29,474 people have now tested positive for COVID-19 in the UK, an increase of 4,324 since Tuesday.
“All our thoughts and prayers are with the families and friends of those who have lost loved ones,” Sharma said.