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Government support schemes failing retailers

Council grants, government-backed loan schemes and furlough payments are failing to reach retailers that have applied for aid to help them stay afloat in the coronavirus crisis. 

Only 9% of grants earmarked for small firms as part of the government’s £11bn coronavirus support package announced last month by chancellor Rishi Sunak have been paid out by local councils to date.

Banks have lent more than £1.1bn to small and medium-sized businesses through the Coronavirus Business Interruption Loan Scheme, UK Finance, the body that represents financial institutions, has reported. 

However, only 6,020 loans have been made out of 28,461 applications so far, and retailers have criticised the process as too slow. 

One independent retailer told Drapers: “We have applied for a business support loan through our bank but are waiting to hear if we have been successful.

“As part of the process, the bank has made us do a complete financial business review, which is costing us a significant sum of money. It includes forecasting three years ahead to check if we are a viable business going forward.

“The whole process has been taken us three weeks to gather the data together and we still don’t know if we will be successful. [The process] seems to be stacked against those who need the cashflow.”

Another independent retailer said: “We did mail our bank regarding a loan, but there were so many hoops to jump through we didn’t bother.

“I have also applied for the grant but we’re still waiting to hear back.”

Andrew Goodacre, CEO of BIRA (the British Independent Retailers Association), said: “With regards to the Coronavirus Business Interruption Loans, it seems that banks are blaming the [government-owned small business development lender] British Business Bank. The British Business Bank is blaming the high street banks. Both are blaming the government. With this blame game going on there is little chance of the [small retail businesses] who need the help actually getting it.

“The processes need streamlining and simplifying. There is evidence that some decisions have been made quickly and they should provide the template for all decisions.

“[Local authorities] are not slow [when] taking payments. They have the rateable value, names, addresses and the bank account details. I see no reason why a reverse payment into the bank accounts could not be made in a great number of cases.

“Instead, we have some online application forms, some with depleted call centres, some taking at least three weeks to pay even after a form is filled in. They have had weeks to think about this and the lack of proactivity is disappointing.”

One independent retailer said: “We haven’t seen anything yet, apart from the business rate relief.”

It was announced this week that the government’s online portal for employers  to make claims for furloughed staff will not be ready until at least the first week of May, instead of 20 April as promised.

Ravi Grewal, co-owner of menswear independent Stuarts London, said: “The furlough support has not come through yet. We’ve put applications in. We’ve had support on rates for our commercial properties and we’re not leaning on the loan scheme. We’re still operational online, so we’re OK at the moment.

“The support is very welcome and helpful. For all the people who are unable to work and are furloughed, it helps give them confidence that they still have a job to come back to. We’re yet to see it, but it’s going to help us in the long run.”

A government spokesman said“We recognise that this is a very worrying time for retailers and workers and we stand ready to support them. The government has put together a comprehensive package for businesses to help them through the coronavirus pandemic including grants, loans and rates relief for retailers.”

 

Readers' comments (3)

  • Businesses have to prove - and rightly so - that they were viable on 31.12.19. That will not apply to every retailer.

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  • We are a well respected retailer in the UK, and traded for over 35 years well known to yourselves. We employ over 70 people. Our FD spent three days preparing an incredibly detailed forecast and precis demonstrating how our company could service the interest on the required loan, only to be told that our application did not meet the criteria, one aspect of which was that you needed to have made a profit the previous year. We actually broke even which in a year which could only be described as an 'annus horribilus' for retail was not a bad result.
    Our manager then proceeded to tell us that all the banks we extremely nervous of the retail sector and would not be lending anymore more money.
    Mr Sunaks bold statement that the government was going to do
    'Whatever it takes' doesn't seem to be being backed up by actions.
    Surely the cost of 70 unemployed people and a failed business is far more costly than interest on a £200,000 loan ?

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  • In our case, our bank was first class. We have always been profitable, so business projections were superfluous. The money is there if we need it. However, we were very pro-active as we were on the case well before lockdown as we knew what was around the corner. Those who waited longer may have got caught in the pile-up.

    Clothing retailing is high risk as our bank manager made very clear. The industry has hardly covered itself in glory over the last decade with administrations of one form or another every five minutes, so it is not surprising that they are being cautious, though there is fair argument that some have been too cautious in some cases.

    What the Government cannot do it back consistently loss making entities, as when we all come out of this, they are going to be the first to fall.

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