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https://www.ft.com/content/8a551c37-2de8-446b-a8b8-d4a61d33ef73#comments-anchor
Rishi is as wasteful with money as Bojo. These companies will just default or the Government to save face will convert the loans to grants.
This is just throwing money at businesses that were not very viable in the first place. Rishi should have held onto the money to effect a quicker turnaround. All he has done is delay the inevitable and guaranteed a sluggish recovery.
UK banks are warning that up to half of the £18.5bn of “bounce back” coronavirus loans are unlikely to be repaid and are lobbying the chancellor to prepare for the collapse of hundreds of thousands of small businesses.
Three senior bankers estimated between 40 per cent and 50 per cent of the 608,000 borrowers who have accessed the Bounce Back Loan Scheme, or BBLS, could eventually default on the debt as the prospect of a quick economic recovery fades. The emergency BBLS facilities are capped at £50,000 with a term of up to six years and come with a 100 per cent government guarantee on the capital and interest. Although the guarantee spares the banks from credit risk, executives are worried that pursuing through the courts hundreds of thousands of small, often family-run businesses — which have borrowed an average of £30,000 each — would be logistically impossible and a “PR disaster”.
Under the terms of BBLS participation it is made clear that banks bear the responsibility of pursuing delinquent borrowers. The Treasury and the British Business Bank, the government-owned development bank that is administering the scheme, have advised lenders to use their normal approach to collections on the loans.
The biggest lenders in the scheme, Lloyds, Royal Bank of Scotland, HSBC and Barclays, have been clear to borrowers that the money is a loan that will need to be repaid, although there is nothing due in the first 12 months and no interest charged to the borrower in that period.
One executive said about a quarter of the loans would not have been made under normal lending practices. However, the Treasury instructed banks not to perform standard credit checks — apart from basic viability and fraud screening — to speed up the payments and help stave off bankruptcy for companies unable to endure the lockdown.
Rishi is as wasteful with money as Bojo. These companies will just default or the Government to save face will convert the loans to grants.
This is just throwing money at businesses that were not very viable in the first place. Rishi should have held onto the money to effect a quicker turnaround. All he has done is delay the inevitable and guaranteed a sluggish recovery.
UK banks are warning that up to half of the £18.5bn of “bounce back” coronavirus loans are unlikely to be repaid and are lobbying the chancellor to prepare for the collapse of hundreds of thousands of small businesses.
Three senior bankers estimated between 40 per cent and 50 per cent of the 608,000 borrowers who have accessed the Bounce Back Loan Scheme, or BBLS, could eventually default on the debt as the prospect of a quick economic recovery fades. The emergency BBLS facilities are capped at £50,000 with a term of up to six years and come with a 100 per cent government guarantee on the capital and interest. Although the guarantee spares the banks from credit risk, executives are worried that pursuing through the courts hundreds of thousands of small, often family-run businesses — which have borrowed an average of £30,000 each — would be logistically impossible and a “PR disaster”.
Under the terms of BBLS participation it is made clear that banks bear the responsibility of pursuing delinquent borrowers. The Treasury and the British Business Bank, the government-owned development bank that is administering the scheme, have advised lenders to use their normal approach to collections on the loans.
The biggest lenders in the scheme, Lloyds, Royal Bank of Scotland, HSBC and Barclays, have been clear to borrowers that the money is a loan that will need to be repaid, although there is nothing due in the first 12 months and no interest charged to the borrower in that period.
One executive said about a quarter of the loans would not have been made under normal lending practices. However, the Treasury instructed banks not to perform standard credit checks — apart from basic viability and fraud screening — to speed up the payments and help stave off bankruptcy for companies unable to endure the lockdown.
bank of england increases base rates to curb it. Maybe they go for the negative interest idea - chaos. I'd want all I have back in my pocket. It isn't much but no way am I going to allow it depreciate that way. This is what world wide or at least the west meetings are probably about. Frankly I suspect there is a chance that we might fair better in the Euro but other countries have their own currencies.
