A construction technology specialist is calling on the UK and Scottish Governments to clarify the criteria for the business interruption loan scheme to avoid firms ‘rebelling’ against the lockdown.
Apsis said that ‘confusion and mixed messages’ are continuing to plague the construction industry and there are ‘growing concerns’ that the business rescue packages will fail to support medium-sized organisations from being eligible to access vital cash.
Dr Alex Reid, co-founder of Apsis said, “Desperate businesses are reporting a constant stream of rejections from mainstream banking based on the failure to meet strict lending conditions that the Chancellor did not state as a prerequisite to obtain financial support. In an industry plagued with poor cash flow, extended payment terms and low margins it is hard to conceive that any civil servant designing a support package would not have the knowledge to know that this industry even in a normal a year would not meet Covid-19 Business Loan Interruption Scheme criteria, let alone one which is overwhelmed with a global pandemic.
“We are hearing first-hand accounts from both banks and financial brokers that the basic criteria set out by the Government is leaving banks no alternative but to reject claims from organisations that operate normally within the construction business environment and the banks are being held up as the fall guys. These rejections are creating an emotional reaction which businesses heap blame and criticism on the banking sector rather than the Scheme design.
“With a growing backdrop of increased desperation, the industry response is one that has limited options, torn between relinquishing their business to support the plea to stay at home to protect the NHS or rebel.”
Dr Reid wants governments to issue “clear guidance” to banks and reduce the eligibility criteria for the construction sector.
He added, “By adopting a one-size fits all approach to support packages will have a devastating effect on the construction sector and must be addressed immediately. Support packages must be flexible to allow banks the ability to tailor financial support specifically to meet the needs based on normal operating parameters within each sector of the economy. This will then allow business who should be praised for being able to operate with turbulent market norms, the lifeline to keep doing what they do best and build Britain out of troubled times when this lockdown has ended.”