Research by the Construction Leadership Council (CLC) has revealed that only 12% of applications for Government-backed loan schemes have been approved to help construction businesses
The Construction Leadership Council (CLC) has researched the impact of the Government-backed loan schemes, with the support of the Institution of Civil Engineers (ICE).
Research also revealed that 30% of construction businesses had their application refused, while 58% were still awaiting a decision.
Reasons for applying for a loan included:
- 40% for a short-term facility to aid cash flow
- 48% for up to two years funding to cover costs of disruption
- 12% for a longer-term source of funding to help rebuild finances
The CLC has called for a streamlined loan process to ensure construction businesses facing financial pressure get the support they need.
Recommendations from the CLC include:
- The need for guidance to support firms in making a loan application, and the Institute of Chartered Accountants in England and Wales (ICAEW) has published a helpful checklist
- Clearer information should be provided by the banks on the rates offered for the products available
A prioritisation system for processing applications according to the following:
- Essential to business survival
- Companies delivering projects supporting public services
- The introduction of flexibility for payback periods and rolling credit facilities
- The removal of early repayment charges.
The CLC warned that SMEs are facing extreme pressure as they lack the resources required for the current application process.
It said that while some SMEs would benefit from the Bounce Back Loan scheme, other construction businesses would be looking for support above its £50,000 threshold.
The CLC has urged government to guarantee 100% of loans under the Coronavirus Business Interruption Loan Scheme (CBILS), to relieve pressure on banks.
A streamlined process
Joint chair of the CLC, Andy Mitchell, said: “The government has done an astonishing job putting in place ground-breaking financial support to UK businesses in very short order.
“The Coronavirus Business Interruption Loan, Coronavirus Large Business Interruption Loan Scheme and Covid-19 Corporate Financing Facility are a shot in the arm for our sector and UK plc.
“We want to help make sure this vital support makes its way into the industry, providing short-term liquidity as companies get back to work after the covid-19 crisis.
“We hope to work with the government and lenders to make sure this happens.”
Hannah Vickers, chief executive at the Association for Consultancy and Engineering, added: “We looked at Germany which has a single streamlined process only doing its own checks on loans above €3m and on a fast-tracked self-certificated basis for loans below €10m.
“By moving towards a similar model in the UK we can save many vulnerable businesses in our sector.”
