Was the Chancellor wrong to guarantee only 80 per cent, rather than 100, of ‘coronavirus business interruption loans’ to keep small- to medium-sized companies afloat? Rishi Sunak’s announcement this week of fully guaranteed micro-loans for the smallest companies seeking to borrow up to £50,000 was reported as a partial climbdown in the face of pressure from the CBI and many of his own MPs to do away with the on-risk slice of the larger scheme, which provides loans of up to £5 million through 40 accredited banks — but which many would-be borrowers have claimed is a bureaucratic nightmare.
Readers certainly confirm that picture. One in the motor trade tells me he wrangled with Barclays for a month, answering endless ‘cut-and-paste questions’ before finally securing approval. Another, in construction, concluded a vivid account of his battle with Lloyds — so far most criticised for being unhelpful in administering this scheme — with a swipe at ‘a bunch of jobsworths who owe their own survival to a government bailout back in 2008’. Only NatWest, majority-owned by taxpayers through its parent RBS, has earned praise for doing what I advised all banks to do last month, which was to ‘cut the crap and act fast for the general good’.
In asking banks to participate in the loan scheme’s risks, there was always a danger they would interpret its rules to suit themselves, add their own conditions and favour their own customers. On the other hand, it interposed a real loan assessment process rather than simply inviting companies to queue for maximum giveaways; it’s backed by a range of other emergency reliefs and subsidies; and it ties the banks into the ‘pain-spreading’ principle I described in previous columns as the best path to ‘herd survival’. I think Sunak is right to stick to his guns.

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