Companies have no idea who will be eligible for new Government scheme
A new recovery loan scheme for business will come into existence next month but, businesses still have no idea who will be eligible, say leading tax and advisory firm Blick Rothenberg.
Richard Churchill a partner in the firm’s business advisory group said: “ The Chancellor announced in his Budget that the new Recovery Loan Scheme would be launched on April 6th, but the eligibility rules have still to be announced.
He added: The current covid lending schemes end at the end of this month, but companies remain in the dark on funding options and are extremely worried about their cash flow situation. If you are a business that needs funding, it is very difficult to know what to do without knowing the rules of the new scheme. Apply quickly now or wait?, In addition it appears the banks will have the ability to set their own criteria.”
Richard said: “ With the pandemic impacting businesses for much longer than originally envisaged, access to additional funding is critical. Businesses face the daunting proposition of seeking to gear up their business to commence trading following the easing of lock down, alongside commencing to make repayments of loans and deferred tax balances from the initial wave of support measures provided 12 months ago. This combination will squeeze their cash flow and will have exhausted their cash reserves to simply survive to this point.”
He added: The finer detail of the Recovery Loan Scheme is yet to be announced. Many businesses will be wary that banks are allowed to set their own rules. Many will recall the stringent tests initially deployed by the banks for CBIL lending at the start of the pandemic. A repeat of ‘the computer says no’ attitude of the banks will deny businesses access to funding at a crucial time, as they seek to kick start their businesses as lock down eases. Businesses need banks to step up and support them at this critical moment.”
Richard said:“Sadly the Chancellor has not learnt from the weaknesses of his previous lending schemes. He has not extended the repayment terms of the loans offered to 10 years. He has not provided flexibility to businesses to take payment holidays or have extended periods of interest only payments. It would appear that the Chancellor is simply unable to offer CBIL borrowers, or those under the Recovery Loan Scheme, the same flexibility that he has already offered Bounce Back Loan borrowers.”