‘Greedy’ banks are threatening the future of up to a million firms who say they will go bust after being denied access to the Government’s emergency loan scheme to bail out businesses hit by coronavirus.
Victims have told MailOnline the Treasury’s ‘approved’ lenders are ‘taking advantage’ of the crisis and offering interest rates of between seven and 30 per cent on emergency loans – even though the current UK base rate is now at 0.1 per cent.
Others have claimed lenders are refusing to give them the business-saving money if they have cash in the bank – or if they do demanding owners put up £100,000 in collateral, usually their homes, if they need to borrow more than £250,000. Some business owners say they have also been rejected if they ask for less than £25,000.
HSBC, Barclays, NatWest and Lloyds have all been named and shamed by customers as all the UK’s banks were under pressure to scrap paying billions in shareholder dividends and deny their bosses their eye-wateringly high bonuses at a time of national emergency.
Tina Mussell, owner of Parlour Farm Kitchens in Cirencester, said she has already been warned by NatWest that she could be refused an emergency loan because her business lost money in the past two years and said: ‘We bailed out the banks as taxpayers in 2008, now we need them to help us.’
Chancellor Rishi Sunak insisted a fortnight ago that British businesses could simply walk into bank branches and apply for emergency ‘Coronavirus Business Interruption’ loans of up to £5million ‘on attractive terms’. He said ‘any good business in financial difficulty who needs access to cash to pay their rent, the salaries of their employees, pay suppliers, or purchase stock, will be able to access a government-backed loan’.
But up to a million businesses have revealed they fear going to the wall, with a BBC survey revealing one in five small or medium firms fear collapse within weeks because the scheme is failing them.
Sarah Keel, of Guildford in Surrey, is the founder of Babycup Ltd, a weaning aid business, who says her bank’s lack of action threatens to derail those contingency plans.
She told MailOnline: ‘I have tried and failed numerous times to make contact with our bank, NatWest, waiting in telephone queues for hours on end’, she says she eventually got a call back but not from the lending department and is still waiting for news and a payment holiday she was promised has never materialsed. She added: ‘This inaction and incorrect action puts our contingency plans into jeopardy’.
Lee Chambers, who runs a wellbeing training company called Essentialise in Preston, Lancashire, has also been refused a loan and is having to use his credit card and selling off his own valuables to stay afloat.
Steve Lord, who runs Nottingham-based Belgrave & Powell, which supplies BAE’s F-35 and Typhoon fighter jet production line, said: ‘Some lenders are taking advantage of the situation. The government needs to make it so everyone’s offering the same terms. It seems to be that if you are lucky you are banking with the right party, if you’re not lucky you’ll end up having to close your business.’
As the Government’s emergency loan scheme appeared to be failing, it also emerged today:
- UK death toll went up a record 381 to 1,789 yesterday and is expected to rocket again today as family of Britain’s youngest coronavirus death, Ismail Mohamed Abdulwahab, 13, who had ‘no underlying conditions’;
- NHS ‘swab centres’ for frontline staff lie empty for a second day as Government is accused of losing control of testing and lagging behind the rest of the world. But an anti-body ‘immunity’ test could be getting closer;
- Firms ramp up prices on coronavirus PPE gear by up to 1,000%, including on masks, gloves and aprons as NHS staff write to the PM asking for protection;
- Imperial College London believe up to 1.8million people could already have had coronavirus patients – one in 37 people in the UK;
- Sadiq Khan still blames commuters for packed Tubes and urges key workers to take the bus;
Weaning cup entrepreneur Sarah Keel (pictured) has blasted her bank NatWest as she still waits for access to the Government’s coronavirus emergency loan scheme for businesses. Tina Mussell, owner of Parlour Farm Kitchens in Cirencester, said she has already been warned by NatWest that she could be refused an emergency loan and said: ‘We bailed out the banks as taxpayers in 2008, now we need them to help us.’
Customers queuing outside a Barclays bank in St Albans as the spread of coronavirus caused increasing financial hardship – the Government insisted that it should be easy to get the money
Chancellor Rishi Sunak announced last month that ‘any good business in financial difficulty’ would be able to take out a Coronavirus Business Interruption Loan
Mark Fuller, who owns popular celebrity haunt Karma Sanctum in Soho, was refused one of the government-backed loans. He is pictured with Katie Price at his London hotel in 2014
A report by The Corporate Finance Network of accountants working with nearly 13,000 businesses predicts that 18% of all struggling small companies will not be able to survive the next month due to the UK lockdown.
This could see nearly four million staff lose their jobs in May, it warned, adding that as many as 42% of small firms could go bust if the lockdown lasts for four months or more.
Scott Littlefield, from SPL Management, a property company based in Poole, told MailOnline: This scheme is not really fit for purpose.
‘Our bank, Nat West, is virtually non-contactable at the best of times and the staff in branch can only deal with personal banking issues, not business.
‘They always say to approach your relationship manager although all relationship managers were done away with in 2010
‘Very few people will be able to access this money. Those that do will be bust within short time at the sort of interest rates being mooted.’
Mark Fuller, who owns popular celebrity haunt Karma Sanctum in Soho, was refused one of the government-backed loans by Barclays.
Tina Mussell, owner of Parlour Farm Kitchens in Cirencester, said she had been warned by NatWest that she could be refused an emergency loan – but is still waiting for a final response.
Her company, which makes bespoke luxury kitchens built by a team of craftsmen, lost around £200,000 in 2018 due to building work and another £32,000 in 2019 because of reduced demand caused by Brexit.
After the business shut due to the coronavirus lockdown in March, Mrs Mussell paid wages for her 20 staff out of her own savings. She now has a bulging £1million order book but needs £250,000 to cover costs over the next three months.
‘NatWest wanted to see the accounts and said that if your business wasn’t in profit last year it’s unlikely you’ll get the loan,’ she said. ‘We now have an amazing order book but if the bank doesn’t support us for the next three months we won’t be able to go any further.
‘We were also asked to provide a cash flow forecast, which is very difficult given we do not know how long the shutdown will last and when we’ll be able to start processing orders again’.
The news comes as a record-breaking 381 coronavirus deaths and 3,009 cases were declared in the UK yesterday, on what was Britain’s darkest day so far in the ever-worsening crisis
Many bosses said banks had declined them emergency payments over claims they had not met the required criteria while others could not get through on the phone or were told the money would take weeks to arrive.
Mark Fuller, who owns popular celebrity haunt Karma Sanctum in Soho, said he was unable to apply for funds because he could not guarantee his businesses would be able to start paying it back after six months in the event of a lengthy shutdown.
‘The loan is under normal business conditions, which is fine but then don’t suggest otherwise,’ he told MailOnline. ‘I have already been told by the government and Barclays that the only way to receive a loan is by cutting my staff.’
Other bosses were declined payments for having significant cash reserves, despite fears these would not be enough to last out a lengthy lockdown, or because they owned properties that could be used as collateral for a regular commercial loan.
Scott Littlefield, from SPL Management, a property company based in Poole, told MailOnline: ‘This scheme is not really fit for purpose. Our bank, Nat West, is virtually non-contactable at the best of times and the staff in branch can only deal with personal banking issues, not business.
‘They always say to approach your relationship manager although all relationship managers were done away with in 2010. Very few people will be able to access this money. Those that do will be bust within short time at the sort of interest rates being mooted.’
Research published today by the BBC suggests that between 800,000 and a million businesses could be forced to shut their doors because they can no longer cover rent, salaries or payments to suppliers.
Chancellor Rishi Sunak announced last month that ‘any good business in financial difficulty’ that needed cash to pay rent, salaries or suppliers would be able to take out a Coronavirus Business Interruption Loan under attractive terms.
The loans of up to £5millions are available for any business with a turnover of up to £45m and include a year’s interest paid by the government and flexible repayments for up to six years.
However, businesses can only get the money if they cannot borrow in a normal way, such as guaranteeing the loans against the value of a property.
If bosses require more than £250,000 they have to sign a personal guarantee, meaning their property is on the line if the shutdown continues for months and they cannot repay the money.
In other developments as the number of UK coronavirus deaths hit 1,789:
Kate Stewart, who runs The Sandon pub and hospitality venue in Liverpool, said she tried to apply for a payment under the Coronavirus Business Interruption Loan Scheme but was bamboozled by its terms.
She told Radio 4: ‘It’s an absolute nightmare. I got the criteria through from Lloyds bank and you’d have to jump through hoops, flip over backwards and then jump over the River Mersey to get it.
‘They said that because there’s equity in my property there’s security there for a normal loan, so I don’t qualify, so I’d still have to service the loan every month like a normal loan.
‘An entrepreneur whose opened their own beauty salon or hair salon, they wouldn’t have a chance. The money just isn’t accessible for the people who need it.’
Other business owners complained about the behaviour of the big banks.
Some entrepreneurs were told by with Lloyds they could not take out an emergency loan but would have to accept a regular one instead.
To make matters worse, the companies were then told their personal assets including their main home will have to be used as collateral, allowing the bank to seize everything they own if they cannot pay back the money.
Damning emails seen by the Daily Mail reveal how difficult Lloyds has made it for firms to obtain the help they desperately need to keep going and continue paying their staff.
Among those rejected was the 63-year-old owner of a Devon-based coach company, who was told he could use the life savings he hopes to retire on in two years’ time as collateral to obtain a standard loan.
The owner of a family-run furniture-making firm was told he would be eligible for a £1.5 million Government-backed loan only if ‘all other available ways of supporting a business on normal commercial terms’ are ‘exhausted’.
He was then informed that Lloyds could secure a commercial loan charged against the main homes of his father and brother, who run the business with him. This would mean their homes could be seized if the firm went bust and they could not pay back the money.
Firms were also told that the ‘business interruption loan scheme’ is available only to company directors who have ‘no tangible security’, meaning personal assets they can use as collateral to secure a standard loan.
Business owners complained of being quoted interest rates as high as 22 per cent on a standard commercial loan.
The FTSE fell 227 points or 4 per cent to 5,445 within today’s first half-hour of trading as banks announced they would slash dividend payouts
Business owners complained Lloyds had refused them emergency loans and pushed them to the bank’s regular commercial ones instead
Companies which have been thrown into financial turmoil after being ordered to shut down their business during the coronavirus crisis are also being instructed to provide a raft of financial information – including their earnings forecasts for the next three months.
Responding to the criticism of Lloyds, a Treasury spokesman said: ‘The Chancellor has made it clear that banks should support small and medium-sized businesses during these difficult times.’
In a humiliating retreat, Lloyds last night told the Daily Mail it would stop demanding personal guarantees on all new loans while the business interruption scheme was running. This also applies to its own loans.
But it said the rules of the new scheme dictate that lenders cannot provide these loans if the firm would be eligible to borrow on ‘normal commercial terms’.
Tory MP Kevin Hollinrake accused banks of not acting ‘within the spirit of the rules’ and described their behaviour as ‘cynical’. He also warned that many firms will go bust if they are forced to wait weeks for commercial loans to come through.
Mr Hollinrake said other major high street banks, including Barclays, HSBC and NatWest, were behaving in a similar fashion.
He said: ‘This is totally outside the spirit of the scheme and not what was intended. We need to make sure that banks are playing fair.’
Lloyds, Barclays and HSBC were all forced to drop demands for personal guarantees on ‘business interruption loans’ worth less than £250,000 last week following a backlash.
A spokesman for UK Finance said: ‘Lenders are working hard to get financing to all businesses who need it as quickly as possible and are using the Coronavirus Business Interruption Loan Scheme (CBILS) where appropriate, with some funding having already been provided under the scheme.
‘All lenders will take into account a business’s individual circumstances when considering applications and many business loans can be provided either unsecured or secured on business assets.’
Has your business struggled to secure an emergency coronavirus loan? Contact [email protected]
The mumtreprenuer, property manager, kitchen designer and psychologist left out in the cold by UK banks after asking for emergency coronavirus loans
MailOnline has been inundated with angry emails from businesses who say the government’s emergency loan scheme is failing them.
These are their stories:
We spent days trying to get through to NatWest and then it blundered with our loan repayment holiday
Sarah Keel, of Guildford in Surrey, is the founder of Babycup Ltd and has spent days trying to get through to NatWest. She was eventually promised help with a loan repayment holiday, only to have the money taken out of her account.
The 40-year-old entrepreneur manufactures Babycup’s First Cups mini-open weaning cups in the UK. She said that she had planned to get through the coronavirus crisis, but her bank’s lack of action threatens to derail those contingency plans.
She said: ‘I have tried and failed numerous times to make contact with our bank, NatWest, waiting in telephone queues for hours on end.
40-year-old entrepreneur Sarah Keel manufactures Babycup’s First Cups mini-open weaning cups in the UK
‘After several days, I got lucky and got through after only 90 minutes wait. What was not so good news though, was that after being transferred between a few departments the response was someone would call me back in the next five days.
‘Two days ago, I received a call back, all very encouraging. Yet it wasn’t from the lending department we needed to speak to, but from one of their other teams drafted in to help with the high volume of enquiries.
‘The person who called was really helpful and was going to do two very important things for us. 1) Make sure our business loan repayment holiday was dealt with. 2) Get our CBILS application underway.
‘But on checking finances this morning, I found that there, showing as debited from our account, was our business loan payment.
‘No payment holiday. In fact, not dealt with at all. So begins the labyrinth journey of now trying to get this not only dealt with as discussed but also refunded.
‘We manufacture in the UK and have put plans in place to work through this very difficult time. This inaction and incorrect action puts our contingency plans into jeopardy.
‘It’s very worrying for a small but growing business and a brand we have worked hard to develop.’
I’ve turned to credit cards after being rejected
Lee Chambers is a psychologist who runs a wellbeing training company called Essentialise in Preston, Lancashire. He’s been refused further financial assistance through his high street lender, which he preferred not to name in case it affected his business.
Instead, the 34-year-old has turned to his own personal finances to keep afloat.
‘I’ve turned to using my credit card and a zero per cent money transfer to cover the gap,’ Mr Chambers said. ‘I’ve also decided to liquidate my own personal assets – a book collection and a few things – to get more money to keep my family fed and sheltered.’
Lee Chambers is a psychologist who runs a wellbeing training company called Essentialise in Preston, Lancashire
Mr Chambers’ business offers speaking engagements, workshops and environmental psychology sessions for office spaces. But many sessions have now been cancelled.
‘One client has agreed to have a zoom session, but they cut our fees,’ he said. ‘It’s a challenging time.’
As the business has only been operating for around a year and relies on face-to-face sessions, Lee says his lender has been reluctant to extend any credit.
‘We got a kind rebuff,’ he said. ‘One thing that has given me hope is that my business advisor says if we can make it through this then we’ll be in a better position to get further lending.
‘I think that was my advisor being supportive. So, while it’s disappointing that they can’t give support now I feel grateful that they think I’ll be back and it’s given me more motivation to make it through this period.’
We bailed out the banks, now it’s their turn’
Tina Mussell, owner of Parlour Farm Kitchens in Cirencester, said she had been warned by NatWest that she could be refused an emergency loan – but is still waiting for a final response.
Her company, which makes bespoke luxury kitchens built by a team of craftsmen, lost around £200,000 in 2018 due to building work and another £32,000 in 2019 because of reduced demand caused by Brexit.
The team at Parlour Farm Kitchens in Cirencester, which currently has a bulging order book – but it needs a bank loan to cover the next three months
After the business shut due to the coronavirus lockdown in March, Mrs Mussell paid wages for her 20 staff out of her own savings. She now has a bulging £1million order book but needs £250,000 to cover costs over the next three months.
‘NatWest wanted to see the accounts and said that if your business wasn’t in profit last year it’s unlikely you’ll get the loan,’ she said.
‘We now have an amazing order book but if the bank doesn’t support us for the next three months we won’t be able to go any further.
‘We were also asked to provide a cash flow forecast, which is very difficult given we do not know how long the shutdown will last and when we’ll be able to start processing orders again’.
It’s not what Boris Johnson promised us
Mark Fuller with Lizzie Cundy and Jessica Wright
A hotel entrepreneur slammed the business loans relief scheme after revealing he could not get Barclays bank to provide him with an emergency payment because he was unable to meet the terms of the scheme.
Mark Fuller, who owns popular celebrity haunt Karma Sanctum in Soho, said the arrangement requires borrowers to pay interest after six months and give a guarantee they will be able to pay the money back.
He said these terms meant the Prime Minister’s pledge to ‘look after’ businesses and keep staff employed were ‘not true’, because it was impossible to guarantee the loans would be repaid when it did not know how long his sites would be closed and losing money.
Mr Fuller said he had already been forced to lay off staff because he could not afford to keep paying their wages and shut a historic Notting Hill fish and chip shop that survived the Blitz because it would never be able to repay any loan.
Although the coronavirus business interruption scheme sees the government cover interest payments for the first six months, meaning initial repayments are cheaper, the borrower always remains liable for the debt at all times.
Mr Fuller told MailOnline: ‘Boris said ‘don’t worry, it’s all going to be ok’ and that he’d make sure we can keep staff employed, so we all gave a big sigh of relief and I applied for my loan.
The businessman says he has already been forced to lay off dozens of staff, including at the Sanctum Hotel Soho
‘But then I see that you’ll have to pay interest after six months and they’ll only lend you money if it’s a viable businesses. I can’t give that guarantee when one of my venues has just opened and is currently loss-making and I don’t know how long everything will be shut.
‘The loan is under normal business conditions, which is fine but then don’t suggest otherwise. I have already been told by the government and Barclays that the only way to receive a loan is by cutting my staff. And the money isn’t not coming any time soon either so I still won’t have the money to cover their wages in the next few months.’
Mr Fuller owns Karma Sanctum Soho, which is popular with celebrities including Nick Knowles and Queen’s Roger Taylor, its sister hotel Karma Sanctum on The Green in Berkshire, and Geales fish restaurant in Notting Hill, which dates back to 1939.