We are greatly concerned about the interpretation by high street banks of the Government’s Coronavirus Business Interruption Loan Scheme, which is designed to offer financial support to small and medium-sized businesses.
Reports from our members suggest that banks believe they should protect their financial exposure first, rather than vulnerable businesses. If banks continue to request their normal security on loans, many small businesses will fail, as they can’t meet the usual requirements, and owners are not willing to risk losing all of their personal assets.
The economy has already taken a hit. If we are to mitigate further effects of the virus, businesses must be in a position to rapidly ramp their activities back up. The Government’s plans, if operated effectively, should go a long way towards allowing that to happen.
Andrew Harding, Chief executive of management accounting, Chartered Institute of Management Accountants
Editor's reply
Dear Andrew
You are right — but I can see why the banks are behaving like this. We’ve spent years telling them to get their balance sheets in order to avoid another crash. Unsecured loans put that at risk. Lots of small businesses will thrive when activity returns — but some won’t. Who will cover those losses?
However, keeping these firms alive is vital to rescue the economy. Banks should step up.
Julian Glover, Associate Editor, Comment
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