BANKS were tonight warned it is their turn to repay the favour and bail out small businesses – more than a decade after they were saved during the financial crisis.
In a stern warning Business Secretary Alok Sharma said it would be “unacceptable” if they didn’t come to rescue sinking firms in their “time of need”.
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It was warned earlier that up to a million businesses could go under as they are struggling to get the help they need now to pay workers.
Firms all over Britain have revealed their fury after being refused emergency loans, or left unable to even speak to banks on the phone.
In tonight’s Downing Street press conference Mr Sharma told the banks that the Government had bailed them out in the financial crash and it was now time for them to “repay the favour” to small businesses and taxpayers across the UK.
Mr Sharma said: “It would be completely unacceptable if any banks were unfairly refusing funds to good business 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.”
He said banks were working “really hard” to give people three month mortgage holidays and extra credit – but urged them to pass on Government help to their customers before it’s too late.
And he thanked businesses for vowing to keep going so far – and assured them that help was available.
Today £22million of business rates relief and grants of up to 25,000 for small high street firms was freed up, he added.
And £12billion has also been pumped into local councils, and is being pushed to businesses who need it most.
Only by helping out businesses now will the country be able to make sure it can “bounce back” from the coronavirus crisis in the coming months, he said.
“Our businesses are doing all they can to support our people – and government will do all we can to support businesses,” he promised.
Former Chancellor George Osborne said this evening banks had the chance to “redeem themselves” for causing the financial crash of 2008 by “coming to the rescue of stricken small businesses”.
Mr Sharma also stepped up warnings to the British public that they must obey the lockdown rules – or risk a second wave of cases in a few months’ time.
“If we stop this too quickly there is a risk that effort people have made is wasted and we see a dangerous second peak,” he added.
Boris Johnson has vowed to assess the three-week lockdown after Easter to see if it’s made enough of an impact.
What help is there for businesses?
- The government has offered to furlough workers through its Coronavirus Jobs Retention Scheme, paying up to 80 per cent of wages up to £2,500 a month
- While self-employed workers can get up to 80 per cent of profits paid by the government for the next three months – again up to £2,500 a month
- Under the Coronavirus Business Interruption Loan Scheme SMEs can get loans and overdrafts of up to £5 million for up to 6 years and the government with guarantee up to 80 per of these loans
- Small firms can get grants of up to £10,000 to help with ongoing business costs
- It has also announced VAT payments and self-assessment tax returns are deferred for three months
- SMEs that cannot afford their tax bills can ask HMRC for a “time to pay” arrangement so any debt collection is suspended
- And they can get up to two weeks’ sick pay – almost £200 per employee up to 250 staff members – refunded by the government.
- A 12-month business rates holiday has been introduced for many businesses
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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 they’ve been offered.
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.
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.”
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.
There are now 25,150 confirmed cases of coronavirus with 1,829 deaths in the UK – a huge spike from yesterday.
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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 two hrs, for the second 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 per cent 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.
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