The emergence of the Coronavirus in recent weeks has introduced a significant new challenge into a business landscape that was already volatile as a result of the uncertainty caused by Brexit. We have already seen some big businesses feeling the effects of the virus counter-measures and a lot of small businesses could be at risk too.
It’s being reported that small businesses are to be offered debt relief by Britain’s banks, building societies and credit card providers if money dries up during the current Covid-19 outbreak.
UK Finance, which represents all the big lenders, said that its members would offer support for affected small companies and individuals in the form of overdraft extensions and repayment relief. The commitment follows indications that the Bank of England and the Treasury are designing some kind of bridging finance for small businesses hit by supply chain disruption.
Andrew Bailey, the incoming governor of the Bank, told MPs that small companies would need help to ensure that they did not go bust by running out of cash as a result of problems caused by the outbreak. “The Bank is already working on what these tools could look like; the right way to incentivise lending to support supply chain finance,” he said.
UK Finance are reported as saying that its members would help by delaying loan repayments, extending loan terms and providing larger overdraft facilities on current terms to affected customers. Similar measures were used in the 2009 recession.
If households suffer a drop in income or face unexpected expenses or bills, lenders were “ready and able to offer support to their customers who are impacted directly or indirectly by Covid-19”, Stephen Jones, chief executive of UK Finance, said. “That could include increasing an overdraft or allowing repayment relief for loan or mortgage repayments.” UK Finance urged households and companies to contact their finance provider as early as possible.
At CB Reid, we feel that it is important that if your business is affected by the Coronavirus outbreak, you discuss it as soon as possible. We are always happy to talk through any issues pertaining to your business and we will help in any way we can.