Following the chancellor Rishi Sunak’s pledge to do “whatever it takes” to ease the impact of the coronavirus outbreak, Credit Strategy rounds up reaction to the £330bn package.
Under the plans, mortgage customers will be offered a three-month holiday from paying for their properties, while businesses in the hospitality industry will pay no business rates for 12 months.
Duncan Swift, president of insolvency and restructuring trade body R3, said: “The chancellor’s ‘whatever it takes’ strategy is the right one, but businesses do need help now, and other types of help are needed alongside the additional access to finance announced today.
“Feedback from our membership is that otherwise healthy businesses are already experiencing a cash flow crisis. Many businesses will face insolvency without significant creditor forbearance or direct help from government to bridge the gap in their finances. It’ll be expensive, but government intervention is needed to weather the storm. As well as additional money going into businesses, payment holidays for businesses on things like PAYE, NICs, or other taxes will help manage outgoings, too.
“The focus on loans could store up problems later: these loans will need to be paid back. Grants for small businesses will help, but larger businesses aren’t immune to the impact of Covid-19.”
Rob Griffiths, director at the Mortgage Market Alliance, said: “Mortgage borrowers who wish to accept a mortgage holiday from their lender need to be fully aware of the detail of such an arrangement and what it actually means for their mortgage payments, the length of their term, and how this might appear on their credit file. This is not the lender paying the borrower’s mortgage for them for a three-month period but a deferment of these mortgage payments into the future.”
Chirag Shah, chief executive of lender, Nucleus Commercial Finance, said: “The impact of coronavirus is hitting SMEs harder and harder each day, particularly those businesses in the hospitality and retail sectors. The government has a vital role to play in supporting SMEs across the country, and today’s announcement of £330bn of government-backed loans demonstrates the chancellor’s commitment to doing just that. Supporting UK businesses is vital to the growth of our economy, and we hope that these measures will provide British businesses with the support they need at this challenging time.”