Great Britain

60% of small businesses ‘to run out of cash’ in three months as they still struggle to access coronavirus crisis loans

ALMOST 60 per cent of small businesses say they'll run out of cash within three months as they still struggle to access coronavirus crisis loans.

It comes as business secretary Alok Sharma recently told banks that it's their turn to bail out small businesses - more than a decade after they were saved during the financial crisis.

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The new report by the British Chambers of Commerce (BCC) also found that 6 per cent of businesses have already run out of cash due to the coronavirus crisis.

Meanwhile, just 1 per cent of firms had successfully accessed the government's coronavirus business interruption loan scheme.

Based on a poll with 1,017 businesses, 8 per cent of respondents had been unsuccessful in their application, which they blamed on the complexity of the process and slow responses, if any, from the relevant bodies.

A whopping 37 per cent also said they are planning to furlough between 75 and 100 per cent of their workforce over the next week, up from 32 per cent of firms last week.

What help is there for businesses?

Adam Marshall, BCC director general, said: "Many businesses face a cliff-edge scenario, either at the end of this month or over the course of the next quarter.

“We’ve seen a big jump in the number of firms furloughing staff, and many are now starting to apply for access to government loan and grant schemes to keep themselves afloat.

"Yet our research suggests that support is only starting to reach firms on the ground.

“We are pleased that the Chancellor is listening and responding to our calls to strengthen the existing support.

"Improvements to the coronavirus business interruption loan 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."

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Carl Jackson, managing partner at business advisory firm Quantuma, told The Sun: "I am afraid the stats do not come as a surprise.

"In one conversation I had this morning with a banker from a high street bank, they confessed they are still trying to get their heads around the schemes themselves and are miles away from the additional lending levels the government are seeking from them.

"They are still wary of lending to corporates who are not able to show clear evidence of their ability to repay and they still have all the internal red tape to go through in terms of credit panels.

"Even those corporates with strong balance sheets will struggle without additional financial support.

"Many businesses deliberately do not hold high levels of cash reserves but instead invest into stock and other trading assets."

While a Treasury spokesperson said: "We’re taking unprecedented action to support businesses and protect jobs.

"This includes announcing £330billion in business loans and guarantees, paying 80 per cent of the wages of furloughed workers, tax deferrals, and covering the cost of statutory sick pay.

"More than 77,000 small businesses have already benefitted from almost £1billion of cash grants while almost 1000 businesses have had more than £90million of loans approved over the last two weeks."

The coronavirus lockdown is set to to be ended in stages as the Treasury fears that businesses won’t survive past June.

But more than one million businesses face going under within weeks — while lenders refuse to honour the Chancellor’s £330billion rescue package.

While thousands of struggling small business owners say greedy banks are "cashing in" on virus crisis leaving them high and dry.

Martin Lewis pleads Chancellor Rishi Sunak to tweak furlough rules to help people who've lost new jobs during coronavirus lockdown

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