Up to a million SMEs could fold as a result of Coronavirus crisis
According to the BBC, research from a network of accountants suggests between 800,000 and a million businesses nationwide may soon have to close.
This comes despite what has been described as an ‘unprecedented level’ of support from the Government to help businesses weather the storm.
When Chancellor Rishi Sunak unveiled his £350bn finance package last month, he stressed he would do “whatever it takes” to see the UK through the crisis.
The package includes £330bn made available through loans, which SMEs can claim for under the Coronavirus Business Interruption Loans (CBILs).
However, thousands of struggling firms have told the BBC they can't get through to their banks by phone or, when they do, are being told by the banks they're not eligible.
With regards to the hospitality sector, several prominent voices have previously said it isn’t in the interests of many business to try and obtain one of these loans.
London Union’s Jonathan Downey has suggested that the Government has to rethink its approach.
He said: “The problem is twofold. Most businesses won’t qualify for a loan because the lender won’t consider them to be viable. And for those that do qualify, why would they want to take on more debt at a time when they have little to no income. All it will do is postpone the problem and increase their liabilities.”
Alex Claridge, chef owner of The Wilderness restaurant in Birmingham, concurs.
Speaking to BigHospitality last week, he said: “Taking on more debt at a time like this is not the answer. The overwhelming impression I get is that this is not about saving companies, it’s about flattening the curve so we don’t see the mass collapse of business. In frank terms, these Business Interruption Loans are a trap, and they’re going to fucking destroy this industry.”
Both Downey and Claridge have said they would like to see an expansion of the Government’s Retail and Hospitality Grant Scheme, which entitles small businesses with a property that has a rateable value of up to £51,000 to secure a grant of between £15,000 and £25,000.
Trade body UKHospitality said yesterday (31 March) that in the absence of ‘an effective finance solution’, it is now pressing for the availability of these grants to be expanded by lifting the £51,000 rateable value threshold.
