Cash flow struggles leave businesses facing "cliff-edge scenario"

Results from the second BCC Coronavirus Business Impact Tracker show that just 1% of firms have successfully managed to access the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) so far. 

The BCC says it conducted the polling between 1-3 April, and received more than 1,000 responses. 

Of those responses, 8% said they had failed to secure a loan under the scheme, with the complexity of the application process, and a slow or lack of response from the relevant body cited as main reasons for the application being unsuccessful.

It is hoped that the Government’s announcements made on 2 April intended to improve access to the scheme​​ will see success rates increase in future weeks.

The results are a further indicator of the urgent cash flow concerns facing businesses all over the country as a result of the ongoing Coronavirus crisis, something that is particularly pertinent to those in the hospitality trade. 

According to the BCC data, 57% of firms only have enough cash in reserve to see out the next one to three months, with 6% saying they had already run out of cash.

“Our latest data shows that many businesses face a cliff-edge scenario,” says BCC director general Dr Adam Marshall.

“Improvements to the CBILS scheme should help more businesses get access to the cash they need over the coming days and weeks. This could be the difference between survival and insolvency for many firms.”

A number of key voices within the industry remain sceptical about the benefits of the CBILS scheme, with London Union’s Jonathan Downey previously telling BigHospitality​ ​​that it isn’t in the interests of many hospitality business to try and obtain one of these loans.

Instead, Downey and others have called for 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 £10,000 and £25,000. 

Last week, trade body UKHospitality said 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 threshold.

According to the BCC figures, only 7% of respondents had said they had successfully received a grant under the scheme so far, with 14% saying they had had their application rejected, many because they did not meet the criteria.