One in every three small and mid-sized firms using government scheme to furlough most staff

One in every three small and mid-sized firms said between 75 per cent and 100 per cent of their staff had been furloughed, according to a new survey from the British Chambers of Commerce (BCC).

However, only two per cent of companies have managed to obtain funding from a public loan scheme set up to help SMEs affected by the coronavirus crisis.

The group found that either a slow or a lack of response from lenders was the primary reason that so few firms were able to acquire finance from the Coronavirus Business Interruption Loan Scheme (CBILS).

Traders have complained that gaining financial assistance from the programme has been very difficult and that despite government announcements on April 2 to streamline the application process, few have received any money. 

‘Businesses on the front line need cash to start flowing from support schemes fast,’ said BCC Director General Dr Adam Marshall.

‘With April’s payday coming up, we are fast approaching a crunch point, and both the furlough scheme and CBILS facilities need to be accelerated.’

Ten days after the scheme began, only 983 companies that applied for loans have received assistance despite around 130,000 making an application. 

New figures released today though have found that more than £1.1billion has been given to UK firms through CBILS, although less than 25 per cent of traders who have applied for funding have gained support.

The scheme was established on March 23, the same day Prime Minister Boris Johnson announced that all non-essential businesses should be closed to prevent the coronavirus disease from escalating.

Small and medium-sized enterprises with an annual turnover of up to £45million can secure certain financial products, including loans and overdrafts valued at up to £5million for a maximum period of six years. 

‘It is essential that the Job Retention Scheme makes payments to businesses as soon as possible. Any delay could mean more livelihoods under threat, more business failures, and more hardship in our communities,’ added Dr Marshall.

The survey also found that two-thirds of companies had furloughed staff in expectation of the government’s Job Retention Scheme becoming active.

Businesses will be able to access the jobs scheme during the week of April 20, leaving only a short time for funds to start to reach cash-strapped businesses before April’s payroll is processed, the BCC remarked.

Cash flow is another notable concern raised by the survey, with 36 per cent of companies reporting that they have only one to three months worth of reserves left, while 17 per cent possess less than a month’s reserves – broadly similar to last week.

A Treasury spokeswoman said: ‘We’ve been taking unprecedented action at unprecedented speed to help businesses, jobs and our economy during this crisis – with hundreds of thousands of firms across the county benefitting from our wide package of support.

‘Our jobs retention scheme is ensuring people are able to stay employed during the outbreak and approvals for our business interruption loan scheme has shown an eightfold increase in the last two weeks – with around 4,200 loans worth just over £800million. We’re working closely with banks to ensure we get this support out to those who need it as soon as possible.’