A top accountant is warning Bath firms hit by the coronavirus crisis not to rush into seeking financial help through the government’s newly-amended package of business support.
Chancellor Rishi Sunak announced changes to the measures yesterday amid widespread criticism that they were not assisting enough businesses and that some banks were putting too many restrictions on new loans, including seeking personal guarantees from small business owners.
The changes will enable larger firms – those with turnovers as high as £500m – to access support while also widening and hastening the flow of state-backed cash to smaller companies.
But Mark Neath, a director of accountancy firm Old Mill, which has offices in Melksham, Wells, Yeovil and Exeter, sounded a note of caution.
“It’s certainly a positive step that larger businesses can now access funding, that was an obvious gap in the support on offer, but the government appears to be making announcements in a hurry and then trying to fill in the detail later which is understandable given the circumstances,” Mr Neath, pictured, said.
“Unsurprisingly, this leads to imperfect schemes being released, but it’s alarming that changes seem to be reactive to newspaper headlines, rather than well thought through policy decisions. I wouldn’t be surprised to see further announcements on this in the coming weeks.
“For all the criticism which they receive, banks by-and-large take a responsible approach to lending. The point which always seems to be omitted by commentators demanding easier access to borrowing is that loans need to be paid back.
“I would urge any business looking to a CBILS (Coronavirus Business Interruption Loan Scheme) loan to carefully consider whether it’s the right thing for their business; take all steps possible to minimise the borrowing requirement; and model their cashflows in recovery period on a range of scenarios to assess the affordability of repayments.”
