Even firms that were thriving before the pandemic may find it hard to service additional debt taken on through Britain's business interruption loans
-19 blew the whistle on the football season, business as usual stopped for Premier League clubs. That in turn made things difficult for their suppliers, including Globall Coach, a firm with software that produces animations for coaches to drill players on match tactics.
Because Globall Coach will not be able to collect £170,000 it is owed until football gets going again, Emile Coleman , its boss, needs to borrow £73,000 through the government’s new £330bn Coronavirus Business Interruption Loan Scheme . But Mr Coleman’s bank, NatWest, part of, is asking questions about the quality of the firm’s profits. Even though the government guarantees 80% ofChronic uncertainty now afflicts most of Britain’s nearly 6m small and medium-sized enterprises .
Most of the blame has fallen on the banks, somewhat unfairly. They have to use a cumbersome legacy system, the Enterprise Finance Guarantee scheme of the British Business Bank . Banks are now throwing resources at making it work. Lloyds Banking Group has shifted 700 staff onto processinggot off to such a bad start, things may now veer too far in the other direction. There are calls for the Treasury to guarantee 100% of new loans to small businesses, as Germany and Switzerland have done.
Taxpayers will get some protection from unviable firms thanks to the Treasury’s stipulation that any “undertaking in difficulty” will not have access to. But it may end up excluding successful British firms which incurred losses a long time ago, or high-growth ones that have recent losses and limited share capital.s that were thriving before the pandemic may find it hard to service additional debt taken on through. It will take time for that to become clear.
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