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I have seen the future and it don't look good. 09:15 - Apr 2 with 1806 viewsLord_Lucan

I spent yesterday afternoon chasing up payments from customers. These customers have been closed for about a week and I have basically put lines through half of them as I can't see them opening again - and we've only just begun.

The problem appears to once again be the banks. Although government are guaranteeing 80% of any Covid interruption loans the banks will not lend unless they have 100% personal guarantee. On top of this there is obviously many hoops to crawl through and the application form apparently is like War and Peace***. As usual the banks don't seem to be lending to businesses that represent a risk despite the loans being largely underwritten.

***I haven't had view of this as I'm not going to bother, it seems too much hassle and I don't want to come out of this with a big loan over by bonce.

The only way I can see an answer this is to tackle in the other way round. Rather than borrowing money to pay for rent, energy etc there needs to be a halt to these bills. The Government has in effect stopped tax, VAT, rates and offered to pay 80% of wages and to be fair that is all quite something but pressure needs to be put on landlords and energy suppliers to stop charges right now. Also HP payments etc need to stop.

SME's in effect need to be put into a freezer.

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I have seen the future and it don't look good. on 09:20 - Apr 2 with 1760 viewsStokieBlue

Must be horrible times for many businesses :(.

I don't think it's quite as easy as you are saying though, for instance, if you stop rents and bills you are just passing the problem from one set of companies to another set of companies.

If a landlord doesn't get paid do they then get help from the government to cover their cashflow problems? Same with energy suppliers.

On the loans, I agree the banks should be much better at getting these out but they are also being asked to take on 20% of the risk of the loans without the due diligence processes that would usually be there. Not sure why the government didn't underwrite 100% of the loans.

SB
[Post edited 2 Apr 2020 9:22]

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I have seen the future and it don't look good. on 09:27 - Apr 2 with 1709 viewsLord_Lucan

I have seen the future and it don't look good. on 09:20 - Apr 2 by StokieBlue

Must be horrible times for many businesses :(.

I don't think it's quite as easy as you are saying though, for instance, if you stop rents and bills you are just passing the problem from one set of companies to another set of companies.

If a landlord doesn't get paid do they then get help from the government to cover their cashflow problems? Same with energy suppliers.

On the loans, I agree the banks should be much better at getting these out but they are also being asked to take on 20% of the risk of the loans without the due diligence processes that would usually be there. Not sure why the government didn't underwrite 100% of the loans.

SB
[Post edited 2 Apr 2020 9:22]


To be fair I think if the government underwrote 100% then everyone would be trying to borrow money that they don't need and splashing it about on stuff they don't need.

At some point the banks need to take a small risk, for too long the banks only lend money to people who don't need it.

If the landlord has a mortgage then they will benefit from a mortgage holiday, if the landlord doesn't have a mortgage then chances are they can get by - and if that weren't the case then I'm sure some sort of net could be put in place.

The way things are going 50% of small businesses, shops, pubs etc will never open again.

Edit; I asked my landlord if he was considering a quarters rent holiday and he obliged - much to my surprise to be fair.
[Post edited 2 Apr 2020 9:29]

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I have seen the future and it don't look good. on 09:30 - Apr 2 with 1696 viewshomer_123

I hear you.

Get this - UK Finance yesterday confirmed the following with regards to the loans - you'll love this:

Banking trade body UK Finance said lenders were "working hard" to get money to businesses as quickly as possible both under the government-backed scheme or by offering normal loans.

But the group stressed that banks could only offer loans on the government's terms if they were unable to lend "under their normal criteria".

"As the business secretary said today, this is a new scheme delivered at pace and there will be issues that need to be addressed," Stephen Jones, who runs the trade body, said.


Yep, that's right - you are reading that correctly. The Government back loan scheme which offers the interest holidays, payment reductions and 80% backing is ONLY]]]] available if Banks won't loan under their terms! Absolute farce.

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I have seen the future and it don't look good. on 09:31 - Apr 2 with 1686 viewsitfcjoe

I have seen the future and it don't look good. on 09:27 - Apr 2 by Lord_Lucan

To be fair I think if the government underwrote 100% then everyone would be trying to borrow money that they don't need and splashing it about on stuff they don't need.

At some point the banks need to take a small risk, for too long the banks only lend money to people who don't need it.

If the landlord has a mortgage then they will benefit from a mortgage holiday, if the landlord doesn't have a mortgage then chances are they can get by - and if that weren't the case then I'm sure some sort of net could be put in place.

The way things are going 50% of small businesses, shops, pubs etc will never open again.

Edit; I asked my landlord if he was considering a quarters rent holiday and he obliged - much to my surprise to be fair.
[Post edited 2 Apr 2020 9:29]


And on a more emotional level, the banks still owe the country a big debt for being bailed out in 2008.

Now is their time to step up, and help - will they?

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I have seen the future and it don't look good. on 09:32 - Apr 2 with 1678 viewshomer_123

I have seen the future and it don't look good. on 09:20 - Apr 2 by StokieBlue

Must be horrible times for many businesses :(.

I don't think it's quite as easy as you are saying though, for instance, if you stop rents and bills you are just passing the problem from one set of companies to another set of companies.

If a landlord doesn't get paid do they then get help from the government to cover their cashflow problems? Same with energy suppliers.

On the loans, I agree the banks should be much better at getting these out but they are also being asked to take on 20% of the risk of the loans without the due diligence processes that would usually be there. Not sure why the government didn't underwrite 100% of the loans.

SB
[Post edited 2 Apr 2020 9:22]


See my post below SB - banks will only loan under the Gov's terms if they will not or cannot loan under their own terms.

Nightmare scenario. As you say, in effect what we are seeing is the drying up or liquidity and what there is simply not moving.

To be fair SB - the Banks were bailed out by the Gov (us) back in 2008 - if they don't return the favour then the UK economy is going to in a far worse position and for longer.

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I have seen the future and it don't look good. on 09:32 - Apr 2 with 1674 viewsStokieBlue

I have seen the future and it don't look good. on 09:30 - Apr 2 by homer_123

I hear you.

Get this - UK Finance yesterday confirmed the following with regards to the loans - you'll love this:

Banking trade body UK Finance said lenders were "working hard" to get money to businesses as quickly as possible both under the government-backed scheme or by offering normal loans.

But the group stressed that banks could only offer loans on the government's terms if they were unable to lend "under their normal criteria".

"As the business secretary said today, this is a new scheme delivered at pace and there will be issues that need to be addressed," Stephen Jones, who runs the trade body, said.


Yep, that's right - you are reading that correctly. The Government back loan scheme which offers the interest holidays, payment reductions and 80% backing is ONLY]]]] available if Banks won't loan under their terms! Absolute farce.


That is pretty rubbish.

I think we are seeing the result of having to make policy almost daily to deal with the realities of the situation.

They need to change that though, it's essentially saying if you're a successful business you aren't eligible for a government loan which is clearly wrong and unfair.

SB

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I have seen the future and it don't look good. on 09:33 - Apr 2 with 1675 viewsLord_Lucan

I have seen the future and it don't look good. on 09:30 - Apr 2 by homer_123

I hear you.

Get this - UK Finance yesterday confirmed the following with regards to the loans - you'll love this:

Banking trade body UK Finance said lenders were "working hard" to get money to businesses as quickly as possible both under the government-backed scheme or by offering normal loans.

But the group stressed that banks could only offer loans on the government's terms if they were unable to lend "under their normal criteria".

"As the business secretary said today, this is a new scheme delivered at pace and there will be issues that need to be addressed," Stephen Jones, who runs the trade body, said.


Yep, that's right - you are reading that correctly. The Government back loan scheme which offers the interest holidays, payment reductions and 80% backing is ONLY]]]] available if Banks won't loan under their terms! Absolute farce.


It also doesn't ring true because unless you can prove you can ride the storm they won't lend you the money.

If you can prove it then you get a standard loan!

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I have seen the future and it don't look good. on 09:34 - Apr 2 with 1664 viewshomer_123

I have seen the future and it don't look good. on 09:32 - Apr 2 by StokieBlue

That is pretty rubbish.

I think we are seeing the result of having to make policy almost daily to deal with the realities of the situation.

They need to change that though, it's essentially saying if you're a successful business you aren't eligible for a government loan which is clearly wrong and unfair.

SB


Indeed and the terms some businesses are being offered by authorised Banks and Lenders are rates as high as 30% and personal guarantees.

I appreciate this isn't something the Gov could plan for but it is such a mess.
[Post edited 2 Apr 2020 9:34]

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I have seen the future and it don't look good. on 09:35 - Apr 2 with 1654 viewshomer_123

I have seen the future and it don't look good. on 09:33 - Apr 2 by Lord_Lucan

It also doesn't ring true because unless you can prove you can ride the storm they won't lend you the money.

If you can prove it then you get a standard loan!


A mare isn't it.

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I have seen the future and it don't look good. on 09:35 - Apr 2 with 1645 viewsStokieBlue

I have seen the future and it don't look good. on 09:32 - Apr 2 by homer_123

See my post below SB - banks will only loan under the Gov's terms if they will not or cannot loan under their own terms.

Nightmare scenario. As you say, in effect what we are seeing is the drying up or liquidity and what there is simply not moving.

To be fair SB - the Banks were bailed out by the Gov (us) back in 2008 - if they don't return the favour then the UK economy is going to in a far worse position and for longer.


I agree they should be underwriting that 20% themselves - I said that above.

Only minor point would be that if there were massive defaults on those 20% and the banks required support people would then moan about the banks. It's a no win situation in their eyes.

You are right though, they should be lending quickly and easily and without too many checks. The government is taking on most of the risk. They also need to change the terms so the government loans are offered before their own loans as you've pointed out.

SB

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I have seen the future and it don't look good. on 09:39 - Apr 2 with 1605 viewsfooters

I have seen the future and it don't look good. on 09:31 - Apr 2 by itfcjoe

And on a more emotional level, the banks still owe the country a big debt for being bailed out in 2008.

Now is their time to step up, and help - will they?


No.

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I have seen the future and it don't look good. on 09:40 - Apr 2 with 1590 viewsNotSure

I'd prefer it if the government fully nationalised one of the banks (They still own over half of RBS) and just bought it under the NS&I umbrella.

They could then lend direct, rather than these guarantees which the banks don't seem to like. It will still cost the banks a fortune in admin and chasing before they can claim the money for any bad loans.
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I have seen the future and it don't look good. on 09:42 - Apr 2 with 1583 viewsgordon

Doesn't sound like a great situation - I wondered something similar, like rather than trying to allow the economy to stumble on somehow, would be possible to just declare a three month freeze on any economic payment for most of the economy - rates, loan payments, mortgages, rents, taxes, any monies due, everything. Effectively just put the economy into induced coma for three months.
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I have seen the future and it don't look good. on 09:44 - Apr 2 with 1573 viewsgiant_stow

I have seen the future and it don't look good. on 09:40 - Apr 2 by NotSure

I'd prefer it if the government fully nationalised one of the banks (They still own over half of RBS) and just bought it under the NS&I umbrella.

They could then lend direct, rather than these guarantees which the banks don't seem to like. It will still cost the banks a fortune in admin and chasing before they can claim the money for any bad loans.


Well said and pushing these loans through RBS might force other banks to follow. The situation outlined by Homer is crazy (hope you're feeling better Homer)

Edit: this also loosely relates to the point made by Toby Young (among others): that the cure could be worse than the disease.
[Post edited 2 Apr 2020 9:48]

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I have seen the future and it don't look good. on 09:46 - Apr 2 with 1560 viewsNotSure

I have seen the future and it don't look good. on 09:31 - Apr 2 by itfcjoe

And on a more emotional level, the banks still owe the country a big debt for being bailed out in 2008.

Now is their time to step up, and help - will they?


I am playing devils advocate here (because I have nothing but trouble with banks) but why should they lend money to bad businesses. About 20,000 go into liquidation in a good year.
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I have seen the future and it don't look good. on 10:09 - Apr 2 with 1463 viewsLord_Lucan

I have seen the future and it don't look good. on 09:42 - Apr 2 by gordon

Doesn't sound like a great situation - I wondered something similar, like rather than trying to allow the economy to stumble on somehow, would be possible to just declare a three month freeze on any economic payment for most of the economy - rates, loan payments, mortgages, rents, taxes, any monies due, everything. Effectively just put the economy into induced coma for three months.


I agree but as a relative simpleton there will be things I haven't thought of that would make it difficult.

It's like one government minister said, We think that we have covered everything and then something else pops up like a giant game of Wacamole

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I have seen the future and it don't look good. on 10:15 - Apr 2 with 1428 viewsBloomBlue

I have seen the future and it don't look good. on 09:42 - Apr 2 by gordon

Doesn't sound like a great situation - I wondered something similar, like rather than trying to allow the economy to stumble on somehow, would be possible to just declare a three month freeze on any economic payment for most of the economy - rates, loan payments, mortgages, rents, taxes, any monies due, everything. Effectively just put the economy into induced coma for three months.


But what happens if goes on for more than 3 months?
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I have seen the future and it don't look good. on 10:19 - Apr 2 with 1415 viewsmonytowbray

It’s weird for me because whilst this is going on, a lot of businesses in my professional circles are flying, mainly Ecommerce sites. Have a client and saw revenue via unpaid search engine traffic more than double vs last month when doing their report yesterday.

Granted what they sell is essential to a large chunk of the population and any high street shop that sells said stuff is almost certainly shut.

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I have seen the future and it don't look good. on 10:31 - Apr 2 with 1372 viewsBloomBlue

I have seen the future and it don't look good. on 10:19 - Apr 2 by monytowbray

It’s weird for me because whilst this is going on, a lot of businesses in my professional circles are flying, mainly Ecommerce sites. Have a client and saw revenue via unpaid search engine traffic more than double vs last month when doing their report yesterday.

Granted what they sell is essential to a large chunk of the population and any high street shop that sells said stuff is almost certainly shut.


Every crisis with have some winners, a story last week was re a haulage company that was looking to make some drivers redundant in Jan because orders were low and now recruiting more drivers as they've never been this busy in the 10 years they existed and will have double the number of drivers compared with last year
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I have seen the future and it don't look good. on 10:38 - Apr 2 with 1337 viewspeterleeblue

The future will be a grossly unfair scenario of new businesses starting up (replacing the defunct ones as the demand for most will still be there) with no doubt huge government and possible Bank Incentives (as they will need to stimulate their own business).

Ideally that support should be made available now to keep afloat the existing ones.

I hope I am wrong I really do,
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I have seen the future and it don't look good. on 11:26 - Apr 2 with 1226 viewsSouthBucksBlue

I have seen the future and it don't look good. on 09:30 - Apr 2 by homer_123

I hear you.

Get this - UK Finance yesterday confirmed the following with regards to the loans - you'll love this:

Banking trade body UK Finance said lenders were "working hard" to get money to businesses as quickly as possible both under the government-backed scheme or by offering normal loans.

But the group stressed that banks could only offer loans on the government's terms if they were unable to lend "under their normal criteria".

"As the business secretary said today, this is a new scheme delivered at pace and there will be issues that need to be addressed," Stephen Jones, who runs the trade body, said.


Yep, that's right - you are reading that correctly. The Government back loan scheme which offers the interest holidays, payment reductions and 80% backing is ONLY]]]] available if Banks won't loan under their terms! Absolute farce.


Yes I read this and was gobsmacked. I haven’t even bothered to read the many emails I’ve got from my bank offering business help.
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I have seen the future and it don't look good. on 11:46 - Apr 2 with 1156 viewsGeoffSentence

I have seen the future and it don't look good. on 09:40 - Apr 2 by NotSure

I'd prefer it if the government fully nationalised one of the banks (They still own over half of RBS) and just bought it under the NS&I umbrella.

They could then lend direct, rather than these guarantees which the banks don't seem to like. It will still cost the banks a fortune in admin and chasing before they can claim the money for any bad loans.


Wasn't that pretty much labour party policy, not to nationalise a bank but to set up one up.

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I have seen the future and it don't look good. on 12:21 - Apr 2 with 1076 viewsmanchego

I have seen the future and it don't look good. on 09:46 - Apr 2 by NotSure

I am playing devils advocate here (because I have nothing but trouble with banks) but why should they lend money to bad businesses. About 20,000 go into liquidation in a good year.


You mean bad businesses like banks were in 2008 ?
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I have seen the future and it don't look good. on 12:24 - Apr 2 with 1065 viewshampstead_blue

I feel for you and those others in that situation.

I understand there may be an announcement this afternoon to tidy up the initial Gov loans packages.
It's no surprise that something put together that quickly will have flaws. I only hope that now they have been identified they are dealt with.

If it's any consolation, we've paid all of our current bills of our development straight away simply as it's the right thing to do but also to make sure we show support to those small firms working with us.

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