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Guarantee 100% of COVID-19 commercial loans or face economic crisis, RHA government warns

Carriers are struggling to access loans through the government’s Business Interruption Loans (CBILS) program, which could leave hundreds of operators facing financial ruin, the RHA warned.

The news comes on the same day that the trucking industry sent a joint letter to Prime Minister Boris Johnson begging for more help during the coronavirus pandemic to prevent “a large-scale trade collapse that could reduce capacity by up to 50% ”.

CBILS was launched on March 23 and aims to support the UK’s six million SMEs during the pandemic by offering loans of up to £ 45million from a £ 3bn pot. Businesses can access the money through 40 approved lenders with 80% of the loan guaranteed by the government.

However, since its launch, only 6,020 of the 28,460 applications have been accepted, amounting to just £ 1.1 billion in loans.

Questions have also been raised as to why, out of more than 300,000 informal requests, only 28,460 formal requests have been received so far, with the Small Business Confederation accusing the government and banks of making the application process too onerous. and complicated.

The RHA wants the UK government to follow the lead of the Swiss government which guarantees 100% of its business loans COVID-19, thereby eliminating any risk for banks.

RHA Policy Director Duncan Buchanan told motortransport.co.uk: “We cannot blame the banks entirely. They are trying to protect themselves. They are being asked to help fund millions of businesses across the economy, but with only an 80% government guarantee – that has to change. “

He said the inability to access loans threatens hundreds of transport companies across the UK.

“This scheme just isn’t working – it clearly isn’t working as only £ 1bn of the £ 300bn made available by the government under the scheme has been released.

“Our members tell us that the banks deny them access to these funds. The banks tell them that they are not entitled to these loans and offer other loan products on different terms, which is unacceptable.

Highlighting the launch today of the government leave portal that will allow companies to claim 80% of the wages of workers on leave, Buchanan added: “The inability to get a loan, combined with the unacceptable time it took the government to provide a means to access government funding to pay the wages of workers on leave, is putting companies that were financially viable before COVID-19 under enormous pressure.

“These programs are simply not suitable for their purpose in this industry where many operators pay their drivers on a weekly basis – these programs do not work for high-asset, low-margin companies such as the trucking industry. . “

The RHA warns that unless the government acts to facilitate access to CBILS loans, the UK’s economic recovery will be jeopardized.

“If 50% of the national fleet is stranded because companies have gone bankrupt for lack of loans, then it will be very difficult to restart the economy and the UK’s recovery will be seriously slowed,” Buchanan said.

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