Fury at banks over 12% interest rate on loans for firms

BARCLAYS was last night accused of charging struggling firms up to 12 per cent interest on government-backed crisis loans.

major banks have also come under fire for telling company directors their personal assets will be seized if their businesses fail.

The Coronavirus Business interruption Loan Scheme was launched by 40 lenders on monday as part of Chancellor rishi Sunak’s £350billion stimulus package.

The government will cover 80 per cent of any losses on bad loans to protect the banks and encourage them to lend.

Under the scheme which is administered by the British Business Bank, small and medium-sized firms can apply to borrow up to £5million for up to six years. The first year is interest free.

However, desperate business owners have complained of being forced to wait hours on the phone as they try to get in touch with banks.

One has alleged that he was quoted an interest rate of up to 12 per cent once the interestfree period was over. patrick macnamara, founder of London-based Brankfleet advisors, finally got through to Barclays after spending more than four hours on the phone.

He claimed he was told that the interest rate after one year would shoot up to between 7 per cent and 12 per cent.

The 45-year-old father, who advises companies on takeovers and raising funds, does not employ any staff. But he said a number of lucrative deals have fallen through as the economy has been paralysed by the pandemic.

He said: ‘The Bank of England has just cut interest rates to a record low of 0.1 per cent.

These types of rates are preposterous, particularly as these loans are guaranteed. it’s outrageous that they will then come after your assets such as your car if you can’t pay.’

Barclays denied that it was charging such rates, but it refused to disclose the range of deals it was offering, saying that they depended on the individual customer.

The mail approached other lenders including natwest, HSBC and Lloyds which also refused to detail their rates.

But ian Cass of the Forum of private Business, which represents 30,000 small firms, said his members have reported being offered rates of between 8 per cent and 12 per cent. Labour mp Chris Bryant said: ‘interest rates are at record lows. This is a phenomenal mark-up from Barclays. We bailed out the banks but it seems banks will be making money hand over fist from these new loans.’

a Barclays spokesman said: ‘The Coronavirus Business interruption Loan scheme requires Barclays to lend according to normal credit policy terms and conditions, which includes when appropriate, personal guarantees.’