Toy retailers are amongst those being frustrated in their efforts to apply for loans.
Business secretary Alok Sharma confirmed over the weekend that 4,200 loans, worth a total of £800m, had been given to firms seeking cash to survive the coronavirus crisis. However, that number represents a mere 1.4% of the 300,000 enquiries which are said to have been made through the scheme since it was launched four weeks ago.
Alok Sharma said banks were working “at pace” to issue the loans, which are backed by the government, although to be fair, he didn’t say precisely what pace he was referring to.
Toy retailers probably have their own view of the whether the pace is acceptable – speaking to one specialist retailer over the weekend, Toy World was told: “I have applied for a loan, but my bank hasn’t even replied or acknowledged my application as yet. I spoke to another retailer yesterday who was refused a loan because they don’t make enough profit, and another was refused because they made a small loss last year – but surely that applies to a large percentage of independent retailers? The government has to step in to sort it out and make sure the money is there for retailers who need it to survive.”
Former Bank of England governor, Mervyn King, has also expressed concerns about how few businesses have so far been successful in accessing money through the scheme. Speaking on Sky News, he asserted that the survival of businesses through the crisis was key to a quick economic recovery: “The economy will only recover quickly if we can keep the businesses that existed at the beginning of it still functioning and able to pick up the reins when the epidemic is over.” He also said it was a mistake to close local bank branches that could have been able to function – with social distancing – to respond to the applications.
For larger companies, the Treasury is thought to be drawing up plans to double the interest-free sums available, from £25m to £50m, while it is also likely to remove the £500m upper turnover threshold in an effort to help even larger companies. The revised terms are expected to be announced this week.