What financial help is there for SMEs during COVID-19?

Out of all the sectors in business, it’s the SME community that’s at the epicentre of the coronavirus panic, at least financially.

Following the announcement that nearly a fifth of small businesses could be at risk of collapsing within a month, the Government has been forced to review the way it’s supporting the sector through the virus outbreak.

Two weeks after Chancellor Rishi Sunak said the UK’s businesses, (where SMEs account for over 99%) could access government-backed emergency loans of up to 5m to keep them solvent, it seems the banks are not being as generous with their lending terms as promised.

While the Government schemes were initially welcomed by the nation’s struggling businesses, a number of businesses have since been refused emergency loans due to their financial performance, with others were turned down for having money in the bank.

The banks

Businesses that are being turned down for emergency funding are being encouraged by a number of Treasury approved lenders including HSBC and Barclay’s to take out commercial loans which require using assets, such as their homes as collateral.

A number of enquiring businesses have also been complaining about waiting times with lenders, with some fearing the banks are taking advantage of the coronavirus pandemic by charging higher interest rates on emergency loans.

For businesses that have been approved for one major government-backed loan, the ‘Coronavirus Business Interruption Loan Scheme’, the main concern is they cannot yet access the funds, with many fearing their businesses could be forced to close before the money is made available.

In addition to this, the scheme will not be guaranteed to all businesses, with HMRC confirming that it will contact the business applicants that are considered eligible for the scheme, who will then be invited to apply via their online platform.

However, it is rumoured that in the coming days, a key feature of the ‘Coronavirus Business Interruption Loan Scheme’ (the requirement for banks to first assess whether SMEs are eligible for their other lending options), will be removed.

Sunak makes some changes

If this is removed, it will speed up decision-making processes within the high street banks and channel loans. Under the revamped programme, any viable business with a turnover of up to £45m will be able to access the scheme, which is interest-free and fee-free for the first 12 months.

This revamp should make it easier for SMEs to access loans more quickly and it should be unveiled tomorrow

Who else is helping?

Just today, Aldermore, a retail bank that provides financial services to small and medium-sized businesses, has confirmed it is now offering the asset finance variant of the CBILS to SMEs, which is now being rolled out across Aldermore’s Asset Finance broker network to enable them to support UK SMEs during this time.

While initially Aldermore is only set to offer the asset finance element of the programme, it does have plans to join other variants of the scheme, helping it to provide further funding to support SMEs.

Tim Boag, Group Managing Director, Business Finance at Aldermore, said: “We are delighted to continue working with the British Business Bank to offer our customers this scheme, building on our credentials as a leading funder for brokers looking to finance assets of all shapes and sizes.

“Small and medium-sized enterprises are the backbone of the UK economy and it is our mission at Aldermore that we do everything we possibly can to help them succeed during this time of uncertainty.”

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