There are all sorts of things Rishi Sunak could do to sort this out but there needs to be urgent action if businesses are to survive.
The Chancellor has put in place a number of schemes to help businesses, but they are not working because the banks have not stepped up to the plate. When he gives his latest statement, he needs to address a number of key issues.
Getting loans is an absolute nightmare. The banks are shut, websites are falling over, and you cannot get through on the telephone.
Getting loans is an absolute nightmare. The banks are shut, websites are falling over, and you cannot get through on the telephone. There needs to be some real creative thinking about the process and banks need to ramp-up their digital capabilities and call centres. The entire process needs to be simplified to make it quicker and more effective.
If you do get through, there is too much red tape. Nobody wants to see reckless lending, but there needs to be a simple way of checking out a business. Perhaps a self-declaration from borrowers along the lines of a tax declaration or alternatively providing a lifeline loan now, say up to £20,000 if simplified criteria are met, whilst the full application is being processed.
The banks are not being creative in their thinking. The money must be passed through to those who need it now in a manner which preserves responsible lending. The Chancellor could look to private investors to get cash to smaller start-up businesses quickly. Introducing incentives, such as tax relief to the value of the loan on amounts up to £100,000 for businesses with turnover of less than £1m, could attract interest from the wealthy individuals who might otherwise be inclined to hold their cash during this period.
Because of the banks’ inertia, other alternate lenders and funding platforms are stepping up to help businesses. Their rates may be higher, but they have got their acts together and are providing money right now. If they can do it, why can’t the banks?
One of the Chancellor’s first steps should be to consider removing certain unnecessary obstacles, for example security over the personal assets of the directors. The loans are subject to Government guarantees already, and excessive security requirements are making it challenging for directors to borrow money that would protect the business and the people it employs.
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