Business fears over £350bn virus bailout

THOUSANDS of businesses are facing an uncertain future as cracks appear in the Government’s £350bn bailout package.

Business groups warned many large firms may not be eligible for the Bank of England’s unlimited loan scheme – leaving them short of funds needed to survive the coronavirus outbreak.

And HM Revenue & Customs has been ‘overwhelmed’ by calls, with worried business owners on hold for up to an hour as they tried to defer tax bills. Fears were also raised for small businesses as councils distributing emergency cash grants said they had not yet received the funds or details of the scheme. But, with quarterly rent bills due tomorrow, the High Street breathed a sigh of relief as the Government blocked landlord evictions.

At the same time officials said that the first handouts from the Business Interruption Loan Scheme will reach businesses by the end of this week.

Last week, business groups welcomed the unprecedented size and scale of the loan and grants schemes, but have now raised concerns that some large employers will ‘fall through the gap’.

Some large firms said they will be unable to access the emergency cash because they are not investment grade companies. This is money borrowed from the Bank of England, which has said it will hand out unlimited cash to large businesses who need to pay their bills while Britain remains in lockdown. Yesterday Greggs, a High Street success story, became the first large company to confirm it had applied.

But at least one other FTSE250 firm, which employs thousands, said it did not believe it was eligible for help after conversations with its bankers. Retail and hospitality firms usually raise money via loans from banks, rather than on the bond markets, and therefore may not qualify for the Bank’s commercial paper.

Stephen Bethel, of the British Retail Consortium, who wrote to the Chancellor and Governor of the Bank of England last week to raise the issue, said: ‘There’s a big gap and many retail businesses will fall into it. I’m told that none of the FTSE 250 retail brands would qualify for it.

‘So it looked like a great bailout – but there’s potentially a big gap in the detail.’

A hospitality industry source added: ‘That kind of paper [bond] doesn’t cover a lot of companies in our sector.’

In response, the Bank of England said companies can get an emergency rating from rating agencies based on their financial position at the end of February.

The loan scheme is one of six significant measures announced by Chancellor Rishi Sunak (pictured). A jobs subsidy will guarantee 80pc of workers’ wages if they are temporarily out of work, up to £2,500 per month. But this money will not reach businesses until the end of April.

The Coronavirus Business Interruption Loan Scheme is designed for 6m small businesses with a turnover of up to £45m. The Government will guarantee 80pc of new loans up to £5m, which are interest-free for 12 months.

The first of these loans will start to land in business accounts this week, but others may have to wait longer.

Local councils will also hand out grants of £10,000 to £25,000 to the smallest business who do not benefit from the Government’s one-year business rates holiday.

But councils, who will hand out the money, have not been provided with details of the scheme.

The Bank of England and Treasury have been contacted for comment.