The Government’s furloughing scheme appears to be having success in preventing redundancies but will need to be extended beyond its current June cut-off, a leading business group says.
The British Chambers of Commerce (BCC) has made the call after its weekly coronavirus business impact tracker found that 76% of companies polled had joined the furloughing scheme, and none of those taking part had made staff redundant.
The majority of companies taking part found the furloughing scheme easy to use, the survey found, but attitudes to the Government’s coronavirus business interruption loan scheme (CBILS) were less positive.
Most businesses that had applied to the CBILS scheme were either waiting for a decision or had been unsuccessful, but many firms at most need of cash did not intend to apply because they didn’t feel they could re-pay the loan, BCC said.
The weekly survey was completed before the latest change to Government support saw Chancellor Rishi Sunak announced easier-to-access Bounce Back Loans worth up to £50,000 for small businesses.
BCC director general Adam Marshall said: “The Job Retention Scheme has become an essential support mechanism for businesses, particularly those unable to operate during the lockdown. With companies now beginning to receive payments, HMRC deserves credit and recognition for getting the scheme up and running successfully.
“While the furlough scheme cannot be indefinite, it will need to run well beyond June 30 in some form to help businesses transition toward a ‘new normal’ as the lockdown is eased.”
He added: “Our data shows loan support has not been getting to businesses fast enough, so this week’s announcement of the Bounce Back loan scheme and further improvements to the CBILS scheme are welcome steps toward getting cash to businesses on the front line.
“Application processes need to be easier, and decisions made more quickly, especially for those firms that have struggled to access CBILS loans.
“There can be no let-up in the pace of work to get cash to stricken businesses, and Ministers must keep an open mind on making even more changes to the support available. It may become necessary for the government to consider grants, rather than loans, for some of our hardest-hit firms – who are concerned about taking on debt amid unprecedented economic challenges.”
The BCC survey found that 57% per cent of firms did not intend to apply for CBILS or other finance, mostly because of fears they could not pay back the loans. Only 13% of companies who had applied for CBILS had been successful, BCC said.
Cash reserves remain a key concern for most businesses, with 51% of firms saying they have less than three months’ cash or less and 5% of companies reporting no cash in reserve.
