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‘Outrageous’ banks put risk on struggling business owners for government-backed coronavirus loans

Labour's Rebecca Long Bailey said the banks ‘must not be allowed to hinder public efforts to shore up our economy’

BANKS’ requirement that business owners surrender personal assets if they cannot repay taxpayer-backed coronavirus crisis loans was branded “outrageous” by shadow business secretary Rebecca Long Bailey today.

Business owners face having assets such as personal savings, shares or holiday homes – but not their main place of residence – repossessed if their firms fail and the loans cannot be repaid.

Coronavirus business interruption loans (CBIL), offering between £25,000 and £5 million, are part of the government’s emergency measures to stop businesses from going under while the economy is in lockdown.

The government has pledged to underwrite 80 per cent of the risk associated with the loans to encourage banks to lend to struggling firms.

Ms Long-Bailey said: “The government are protecting banks but not demanding any protection for businesses in return. This must change immediately.

“Banks were responsible for the last financial crisis – they must not be allowed to hinder public efforts to shore up our economy through this crisis.”

Tory MP Kevin Hollinrake, a former business owner who chairs the all-party parliamentary group on fair business banking, said that Chief Secretary to the Treasury Steve Barclay had broken a pledge that the conditions for government-backed loans would not include personal guarantees.

He warned that “very few” business owners would take up the loans if their personal assets were at stake, which suggests that more jobs could be lost.

HSBC told the BBC it would require a form of personal guarantee for loans over £100,000.

But Royal Bank of Scotland, which also owns NatWest, confirmed that it would offer CBILs without asking for personal guarantees. 

Today, Barclays U-turned on their policy and removed the need for a personal guarantee to access the taxpayer-backed loans following pressure from business owners.

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