U.K. Popcorn Maker Shows Problems with Government’s Virus Rescue

(Bloomberg) -- A U.K. gourmet popcorn manufacturer can attest to why few small businesses are getting the financial aid the government is advertising.

Adam Sopher, co-founder of Joe & Seph’s, said one of the banks he’s applied to for a loan is asking him to provide a personal guarantee. That’s even after the U.K. Treasury loosened the terms of its headline aid package so that such a step wouldn’t be necessary.

“The application process is proving a challenge,” he said.

Data from the British Chamber of Commerce backs that up. Just 2% of the 701 small and medium-sized businesses surveyed received assistance, the lobby group said Wednesday in a statement. Another 9% of businesses applied but were unsuccessful, citing slow or no response from lenders.

While that’s an improvement on last week’s 1%, it’s a frustrating start to a system that’s supposed to help assure the fortunes of the nation’s six million small companies. Those kind of firms account for three out of five jobs, according to the Federation of Small Businesses, and many are being financially squeezed because of restrictions to tackle the coronavirus.

Time may be running out as end-of-month payrolls approach. Less than half of those surveyed by the BCC have more than three month’s cash in reserve, and an extended lockdown will cause further damage to the economy and company finances.

The government’s fiscal watchdog said Tuesday the economy could shrink a staggering 35% this quarter if there were a three-month lockdown.

The government’s job retention program is to start processing claims from businesses on April 20, with the first payments going out more than a week later.

“Businesses on the frontline need cash to start flowing from support schemes fast,” said Adam Marshall, BCC director general. The help needs “to be accelerated.”

A spokesman for the U.K. Treasury was unable to provide immediate comment.

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