ALMOST a fifth of all small and medium-sized businesses across the UK face closure because they are unlikely to get the money they need to survive the next month of the coronavirus outbreak despite the unprecedented package of support from the UK Government.

Research involving 13,000 firms, published today, from the Corporate Finance Network, which represents independent accountancy firms, suggests as many as one million businesses nationwide could go under because they will not be able to get emergency loans from banks or, if they can, the cash will not arrive in time.

The big lenders insist they are following the rules on making the loans as set out by the Government. The terms are that businesses can only get an emergency loan if they are unable to borrow in a normal commercial way, such as borrowing against the value of a property.

The Treasury stressed that "hundreds" of loans had already been issued through the Government's emergency loan scheme.

"Hundreds of these loans have gone out. Obviously, different banks work in different ways but cash has very much gone out of the door," declared a spokesman.

The research suggests 18 per cent of firms – 800,000 to 1m – might not be able to survive the next four weeks and if the lockdown lasts three months or more, the situation will worsen with as many as three in 10 small and medium-sized enterprises closing down by June.

The SNP renewed its call for the Government to ensure businesses had access to finance now. Alison Thewliss, its Treasury spokeswoman, said it was “absolutely crucial” businesses in Scotland and across the UK could access funds in time. The Glasgow MP called for Rishi Sunak to urgently set out how the Treasury would respond to businesses’ concerns and ensure funding was delivered on the ground.

Last month, the Chancellor said business managers would be able to walk into bank branches and discuss Coronavirus Business Interruption loans of up to £5m to help them survive the lockdown.

Mr Sunak said: “Any good business in financial difficulty which 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, on attractive terms."

Yet, many firms under the threat of closure say they are unable to contact their banks by phone or, if they can, are told by the banks they are not eligible for the lifeline. Claims have been made that banks are charging interest on loans as high as 30 per cent.

UK Finance, the bank trade body, 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 where appropriate, with some funding having already been provided under the scheme.”

It added: "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."

But Kirsty McGregor of the Corporate Finance Network, told the BBC: "Small and medium-sized businesses employing less than 250 people employ most of the workforce: 23m people.

"We could lose up to a million of them in the next month or so. And it will be irreversible which will be catastrophic for the UK economy.”

Ms McGregor suggested the Government should adopt a “rescue and recovery” incentive for successful SMEs, involving the more robust ones buying at risk others in their sector. This could save up to four million jobs, maintain commerce and turn it around once the lockdown ended.

Ms Thewliss said: “It is absolutely crucial that businesses across Scotland and the UK can access the finance they need now to pay their costs and stay afloat. This is an issue we have been raising for weeks.

"Thousands of small and medium-sized businesses are facing unacceptable barriers and delays, which could force them to close if they are not resolved urgently.

"The Chancellor must outline how the UK Government will respond to ensure firms get the cash they need. We cannot allow good businesses to go to the wall because support isn't provided in time; that would be a disaster for the businesses, their staff and the wider economy.”

She added: "It is also important that the right financial support is available with more grants as well as loans to reflect the fact that businesses are losing income, not just seeing it deferred.

"People need jobs and businesses to go back to after this crisis. If we want to ensure the economy can get back up-and-running, and prevent mass unemployment, the UK Government and banks must act now. We cannot afford further delays."

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