UK government coronavirus support ‘flawed’, financial company warns
The UK government’s proposed Coronavirus Business Interruption Loan Scheme is “flawed” and does not address “fundamental issues”, a corporate financial and business consultancy firm has said.
Bristol-based Shaw & Co said the scheme is a step in the right direction but will protect only a fraction of those businesses and jobs it is intended to.
According to the firm, the scheme is effectively the same as the Enterprise Finance Guarantee (EFG), clunky to access and probably not scalable given the widespread concern around current conditions.
It argues that there remains a high burden of risk on lenders which will be passed onto SME owners, as 20% of the loans will need to be secured.
The firm argues that the scheme should be 100% guaranteed by government and would be even better as a grant funded by an increase in corporation tax, or as a repayment scheme similar to student loan repayments.
Founder and CEO Jim Shaw said: “As active practitioners in the SME funding space, we applaud the clear determination of this Government to ‘Do Whatever It Takes’ in fighting the damage this crisis is inflicting on people’s health and our country’s businesses, jobs and prosperity.
“However, we were left entirely underwhelmed by the proposals as the impressively big number of £330bn was only to be lent to the UK companies and only through mechanisms which we believe are doomed to be largely ineffective.
“It is not just a question of throwing money at the problem, it is vital that businesses have quick and efficient access to finance and the measures are not blighted by bureaucracy.”
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