HIGH street banks should be offering interest-free loans to struggling businesses during the coronavirus pandemic, a Renfrewshire councillor has insisted.
Councillor Andy Doig has written to Chancellor Rishi Sunak highlighting the financial strain many small firms in the area are feeling since having to close or limit operations due to the outbreak.
Mr Sunak recently announced the launch of the Coronavirus Business Interruption Loan Scheme [CBILS], which is offering loans of up to £5million for small and medium-sized enterprises (SMEs) through the British Business Bank.
The loans are being issued through accredited lenders, such as high street banks. However, the Treasury has so far not capped the interest rates banks can charge.
And many firms in Johnstone town centre have approached Cllr Doig – who represents the area – saying the scheme is of no help to them.
Some have suggested they will not see any cash come through until June, while several are facing interest rates of up to 30 per cent.
The UK government has said it will cover the first 12 months of interest and fees for these loans and expects rates to be competitive and fairly priced.
Cllr Doig, who represents villages Kilbarchan, Howwood and Lochwinnoch as well as Johnstone North, has now written to Mr Sunak asking he instruct banks to offer interest -free loans to ensure local SMEs can survive.
He said: “I have e-mailed the Chancellor offering a few words of wisdom as traders in Johnstone town centre are telling me they will not get the business assistance money [CBILS] until June.
“Sadly, for many small businesses in Johnstone town centre this may be too late. Mr Sunak has to streamline his CBILS either by cutting out some of the red tape involved, or instructing the high street banks to offer interest-free loans when dealing with CBILS applicants.
“It’s really quite straightforward. The big high street names are big enough to weather a few months of turbulence, but our much-loved small businesses are not, so they might go under, and that is what some in Johnstone are telling me.
“I also have a message for the high street banks. In 2008/09 the country stepped in to save the banks and stop them going under, as that was the right thing to do. Well, now they have a chance to repay the favour and stop our small businesses from going under.”
Mr Sunak was forced to make some changes to the CBILS last week amid claims banks were taking advantage of it.
Banks will now be banned from asking company owners to guarantee loans with their own savings or property when borrowing up to £250,000 and larger firms with a turnover of up to £500m will also be eligible for more help.
Applications will also not be limited to businesses that have been refused a loan on commercial terms.
Mr Sunak said: “We are making great progress on getting support out to businesses.
“And now I am taking further action by extending our loan scheme. We have also listened to the concerns of some larger businesses affected by Covid-19 and are announcing new support.
“We’ll continue to work with the financial services sector to ensure the £330billion of government support reaches as many businesses in need as possible.”
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