Posted in loeqqavsgvuk

Coronavirus loan scheme risks ‘wall of redundancies and defaults’

first_imgTuesday 7 April 2020 8:03 pm Alberto Thomas of Fideres said the slow pace of lending and the paltry sums so far disbursed would lead to massive job losses in the immediate future. James Booth “Unless you intervene and say to the banks ‘you must lend’ the banks will do as they choose and on the terms they set,” a law firm partner said. Another criticism of the scheme is that although the government will cover 80 per cent of the loans, the banks are still being asked to lend during a period of acute economic uncertainty and after being told by the Bank of England to stop paying dividends to protect their balance sheets. The failure of the coronavirus loan programme to help struggling small and medium-sized businesses risks triggering a “wall of redundancies and defaults” say critics. Last week, the scheme was overhauled after criticism that banks were trying to push borrowers towards alternative products, charge high rates of interest and ask for personal guarantees from directors. The coronavirus loan scheme is not getting cash to businesses fast enough critics say (Getty Images) Also Read: Coronavirus loan scheme risks ‘wall of redundancies and defaults’ say critics A spokesperson said: “We have been clear that we all must play our part in the national effort to support businesses and protect jobs. It provides for a loan of up to £5m from one of 40 accredited lenders for UK businesses with a turnover of less than £45m with the government covering the banks for 80 per cent of the loan. “The response to the government meddling in their business will be ‘You are going to shoot our liquidity to bits if you force us to lend to these zombie companies.’” They added. whatsapp Ad Unmute by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeBleacherBreaker4 Sisters Take The Same Picture For 40 Years. Don’t Cry When You See The Last One!BleacherBreakerUndoMisterStoryWoman Files For Divorce After Seeing This Photo – Can You See Why?MisterStoryUndobonvoyaged.comTotal Jerks: These Stars Are Horrible People.bonvoyaged.comUndoDefinition24 Of The Most Hilarious Yard Signs Ever WrittenDefinitionUndoNational Penny For Seniors7 Discounts Seniors Only Get If They AskNational Penny For SeniorsUndoDaily FunnyFemale Athlete Fails You Can’t Look Away FromDaily FunnyUndozenherald.comMeghan Markle Changed This Major Detail On Archies Birth Certificatezenherald.comUndoBeach RaiderMom Belly Keeps Growing, Doctor Sees Scan And Calls CopsBeach RaiderUndoNinjaJournalistThe Most Expensive Royal Weddings In Royals HistoryNinjaJournalistUndo “We’re working with the financial services sector to ensure that companies feel the full benefits from this support.” The Treasury said the chancellor was meeting with the heads of the banks this week to urge them to support small and medium-sized businesses. However, banks are still able to ask for guarantees from directors on loans for more than that amount, leaving directors with the possibility they will be personally on the hook if their business fails. More From Our Partners Police Capture Elusive Tiger Poacher After 20 Years of Pursuing the Huntergoodnewsnetwork.orgBiden received funds from top Russia lobbyist before Nord Stream 2 giveawaynypost.comAstounding Fossil Discovery in California After Man Looks Closelygoodnewsnetwork.orgFlorida woman allegedly crashes children’s birthday party, rapes teennypost.comA ProPublica investigation has caused outrage in the U.S. this weekvaluewalk.comRussell Wilson, AOC among many voicing support for Naomi Osakacbsnews.comUK teen died on school trip after teachers allegedly refused her pleasnypost.comNative American Tribe Gets Back Sacred Island Taken 160 Years Agogoodnewsnetwork.orgBrave 7-Year-old Boy Swims an Hour to Rescue His Dad and Little Sistergoodnewsnetwork.org A report from economic consultancy Fideres Partners said the monthly pay roll of the UK’s 6m small and medium-sized businesses amounted to £41bn. The coronavirus loan scheme is not getting cash to businesses fast enough critics say (Getty Images) center_img The coronavirus loan scheme is not getting cash to businesses fast enough critics say (Getty Images) Also Read: Coronavirus loan scheme risks ‘wall of redundancies and defaults’ say critics Share “I talked to one business where the bank was stipulating personal guarantees and they were considering whether the directors wanted to take the risk or to put the business into administration. My sense is that is not what the government was intending,” he said. The coronavirus business interruption loan scheme was introduced by chancellor Rishi Sunak last month to help funnel money to businesses hit by the economic freeze that has followed the coronavirus lockdown. The coronavirus loan scheme is not getting cash to businesses fast enough critics say (Getty Images) Also Read: Coronavirus loan scheme risks ‘wall of redundancies and defaults’ say critics However, City A.M. revealed today that UK Finance data showed banks had paid out just £291.9m to 2,022 businesses under the scheme, translating to an approval rate of just 0.65 per cent. Giles Murphy, a partner at accountancy firm Smith & Williamson, said directors could decide that winding up their business now was less of a risk than signing assets over to the bank further down the line. “That is why we’re taking unprecedented action and have announced £330bn in business loans and guarantees, paying 80 per cent of the wages of furloughed workers for three months, VAT and tax deferrals, introducing cash grants of up to £25,000 for small companies and covering the cost of statutory sick pay. Tags: Coronavirus “I don’t think we have seen the tip of the iceberg in terms of redundancies and bankruptcies,” he said. The coronavirus loan scheme is not getting cash to businesses fast enough critics say (Getty Images) Also Read: Coronavirus loan scheme risks ‘wall of redundancies and defaults’ say critics Show Comments ▼ whatsapp Thomas said the scheme is “slow and it is open to abuse by the banks” which as well as asking for guarantees have been reportedly quoting high rates of interest on the loans after the first year during which interest and fees will be covered by the state. However, Thomas said a full overhaul of the scheme was needed to avoid a catastrophic wave of business failures and job losses. The requirement for banks to first offer borrowers standard loan products before they could access the scheme was dropped in the shake-up and asking for personal guarantees for loans under £250,000 was banned. Coronavirus loan scheme risks ‘wall of redundancies and defaults’ say critics “You have a wall of redundancies and defaults coming which is immense,” he said. “You can pretty much count the days.”last_img read more