London Daily

Focus on the big picture.
Thursday, Jul 31, 2025

A fifth of smaller firms 'will run out of cash'

A fifth of smaller firms 'will run out of cash'

Despite government help, almost 20% of UK firms are unlikely to get the money they need to survive.

Nearly a fifth of all small and medium-sized businesses in the UK are unlikely to get the cash they need to survive the next four weeks, in spite of unprecedented government support.

That's according to research published today, which suggests that between 800,000 and a million businesses nationwide may soon have to close.

Many firms have told the BBC that banks have refused them emergency loans.

Others can't get through on the phone or were told the money will take weeks.

The banks say they are following the rules set out by the government.

Chancellor Rishi Sunak said two weeks ago businesses would be able to walk into bank branches and discuss Coronavirus Business Interruption loans of up to £5m to help them survive the shutdown.

The promise from the chancellor was that "any good business in financial difficulty who needs access to cash to pay their rent, the salaries of their employees, pay suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms".

But with most bank branches closed, thousands of struggling firms can't get through by phone or, when they do, are being told by banks they're not eligible.

Steve Lord runs Belgrave & Powell, a Nottingham-based engineering group employing 120 people and supplying services to customers such as BAE's Samlesbury site, where the F-35 and Typhoon fighter jets are made.

'Disappointment after disappointment'


Since Salmesbury halted production, his business - like millions of others - is facing the prospect of cash drying up, threatening its ability to pay wages and stay afloat.

"I was heartened and astonished to see the unprecedented help that was announced by the government two weeks ago," he said. "But we put one of our most senior people on it and as each day passed it was disappointment after disappointment."

He said some of the approved lenders were demanding interest rates of up to 30%, which Mr Lord believes is "taking advantage of the situation". Meanwhile, he said, High Street banks were charging around 7%, however he was told it could be as long as a month before his firm got the money.

Mr Lord thinks too much control has been handed to the banks and approved lenders: "The government needs to make it so everyone's offering the same terms."

"It seems to be that if you are lucky you are banking with the right party, if you're not lucky you'll end up having to close your business."


'The loans won't help'


Another business owner, Peter Jackson - who runs jewellery shops employing 40 people across the north-west of England - said his bank decided he was ineligible because the firm made a small loss in 2019. But Mr Jackson said his business was viable before the shutdown and expected to make a profit this year. It also owns valuable stock.

"I thought the whole point of the loans was to help business like mine stay afloat," he said. "But they're not going to help."

The figures identifying how many businesses would not be able to access cash come from a network of accountants serving more than 12,000 small and medium-sized businesses across the country.

After analysing the government help on offer, those accountants say that 18% of their clients were unlikely to get access to the cash they will need to survive a four-week lockdown.

The findings echo similar reports from other business groups, estimating that up to a fifth of businesses could close if the lockdown lasts a month or more.

Bank say they're following rules set by the government, which mean firms can only get the emergency loans if they can't borrow in a normal commercial way, like borrowing against the value of a property.

Businesses wanting to borrow more than £250,000 are being told by banks that directors must sign personal guarantees. That means if the loan goes bad owing to a prolonged shutdown, their personal property is on the line.

Joshua Wade runs a fast-growing ethical cosmetics business, Skin and Tonic. He said lenders were insisting on early repayment penalties as well as personal guarantees.

"The Business Interruption Loan Scheme is, in principle, very welcome support right now," he said.

"But the huge barrier for us is the requirement for all directors to give personal guarantees. As founders and executive directors, we already are risking everything but we simply can't ask our non-executive directors to take that risk on in such challenging and uncertain times."

A spokesperson for UK Finance, the bank trade body, said: "Lenders are working hard to get financing to all businesses who need it as quickly as possible and are using the Coronavirus Business Interruption Loan Scheme (CBILS) where appropriate, with some funding having already been provided under the scheme.

"All lenders will take into account a business's individual circumstances when considering applications and many business loans can be provided either unsecured or secured on business assets."

Kirsty McGregor, founder of the Corporate Finance Network, told the BBC: "Small and medium-sized businesses employing less than 250 people employ most of the workforce - 23 million people.

"We could lose up to a million of them in the next month or so. And it will be irreversible which will be catastrophic for the UK economy."

Ms McGregor suggested the government needs to encourage small businesses to take over companies going bust in their area so employees can still be paid.

Newsletter

Related Articles

0:00
0:00
Close
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
×