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Law360, London (April 8, 2020, 3:21 PM BST ) Only 1% of businesses in Britain have gained access to an emergency lending program established by the government to keep them afloat during the coronavirus crisis, according to a survey published Wednesday, fueling concerns about cash flow at struggling businesses.
The British Chambers of Commerce, which represents businesses across the country, said that just one in 100 companies had successfully applied for the government-backed coronavirus business interruption loans, while 8% have been rejected from the scheme. The remaining 91% had not applied or may not plan to do so.
Chancellor Rishi Sunak announced the program on March 17 to allow the government to underwrite loans of up to £5 million ($6.2 million) to companies that are struggling during the shutdown.
Sunak expanded the scheme this month to all viable small and midsized businesses that have faced financial difficulty during the COVID-19 pandemic, rather than just those that have been turned down for commercial lending. Until then, fewer than 1,000 struggling companies had secured financing, despite making more than 130,000 inquiries.
The BCC said it hoped that the government's extension of the scheme would improve access, amid fears that businesses are struggling with cash flow. The body said Wednesday that 16% of the 1,000 British businesses it quizzed held less than a month's worth of cash in reserve, while 6% reported having no money in reserve.
"Our latest data shows that many businesses face a cliff-edge scenario, either at the end of this month or over the course of the next quarter," Dr. Adam Marshall, director general at the BCC, said in a statement. "Many are now starting to apply for access to government loan and grant schemes to keep themselves afloat. Our research suggests that support is only starting to reach firms on the ground."
The group also said on Wednesday that 59% of businesses are aware of the scheme and 19% have indicated that they plan to use it. But the BCC said that awareness of the scheme is not translating into companies having access to it.
The chancellor, together with the Bank of England and Financial Conduct Authority, urged chief executives of Britain's banks in March to ensure that the benefits of the loan scheme are passed to businesses and consumers.
The intervention comes weeks after the chancellor used his first budget to announce a £30 billion package to support businesses facing hardship from the economic fallout of the pandemic.
HM Treasury said that 2,500 businesses have had more than £453 million of loans approved in the last two weeks.
"We're taking unprecedented action to support businesses and protect jobs," a Treasury spokesperson said.
--Additional reporting by Joanne Faulkner. Editing by Ed Harris.
Update: This story has been updated to add comment from the Treasury.
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