Government tells banks: 'don't deny good firms in financial difficulty'

Thu 2 Apr 2020
Posted by: Ana Pintor
Trade News

The government has called on banks to “repay the favour” of the taxpayer bailout during the 2008 financial crash and step up for businesses during the Covid-19 outbreak.

Business Secretary Alok Sharma was speaking at yesterday’s Daily Briefing (1 April) alongside Yvonne Doyle, director at Public Health England.

Amid reports SMEs are struggling to access the multi-billion support package government is providing, including the Coronavirus Business Interruption Loan Scheme (CBILS), Sharma called on banks to ensure the money reaches business more quickly.

He said:

“It would 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 in 2008, we will do everything we can to help the banks repay that favour and support the businesses and people of the UK in their time of need.”

The banking industry’s trade body, UK Finance, said it was administering the schemes in accordance with government guidelines.

The Chancellor is looking to remove the requirement for banks to assess whether SMEs are eligible for other lending options before granting access to the CBILS, according to reports.

SMEs ‘not accessing funds’

The business secretary’s message to the banking industry comes amid reports of SMEs struggling to access cash from the government’s funding schemes.

The Guardian yesterday reported a survey from Corporate Finance Network showing 18% of SMEs will either probably or definitely not be able to obtain the cash support.

A third of the network’s 13,000 members are also unable to acquire the cash needed to ride out a three-month lockdown.

The Treasury is providing a £330bn package of support for the economy and Sharma said businesses are benefitting from £22bn in business rate reliefs and grants.

He said £12bn in grants is being administered by local authorities and he has “made it clear” this “must reach businesses as quickly as possible”.