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Business briefing: Firms dash for £50k bounce back loan cash

BANKS were deluged with applications yesterday as thousands of small businesses rushed to apply for the chancellor’s new ‘bounce back loans’.

Lloyds was the busiest, receiving 2,000 loan requests in the first two hours, while Barclays fielded 200 calls in the first minute.

The loans of up to £50,000 set out by Rishi Sunak (pictured above) are aimed at those smaller firms hit hard by Covid-19. They are 100 per cent guaranteed by the government.

‘The process to be able to get access to the money is super simple,’ said Barclays chief executive Matt Hammerstein. ‘We’d expect the cash to be with those clients over the course of the next 24 hours.’

Lloyds said the average amount businesses had applied for was £35,000 and that it expected BBLs to dwarf the more complex coronavirus business interruption loan scheme.

‘Some of the other European schemes had a 100 per cent government guarantee from day one,’ Lloyds’ boss David Oldfield told MPs yesterday. ‘That, therefore, alleviated some of this pressure on banks to do affordability and the viability checks.’

HSBC said it received 12,800 applications by lunchtime while RBS/NatWest recorded 22,000 by 2pm.

The loans charge 2.5 per cent interest with no repayments in the first year.

‘This new scheme gives owners of even the smallest businesses the confidence and flexibility to borrow a sum which works for them,’ said the business secretary, Alok Sharma. ‘This will help ensure they can continue to trade, and be a key part of our efforts to reboot the British economy.’

But the pressure on the economy was emphasised as Downing Street revealed 800,000 firms have now applied to have 6.3million workers furloughed.

J. Crew is first US retail giant to fall

Wearing it well: Former first lady Michelle Obama PICTURE: GETTY

AMERICAN fashion outlet J. Crew has applied for bankruptcy protection as it struggles to survive the pandemic.

The New York-based preppy brand, a favourite of former US first lady Michelle Obama, struck a deal to eliminate its £1.31billion debts in exchange for ceding ownership to creditors. J. Crew is the first big US retailer to fall to the pandemic.

J. Crew also plans to close stores, though the final number has not yet been determined, a source said.

Covid-19 has forced the company to temporarily close its nearly 500 J. Crew, J. Crew factory and Madewell stores. The company has also shelved plans for an initial public share offering of its Madewell business. J. Crew had already been struggling, along with other brick-and-mortar retailers, to compete amid the shift to online shopping.

BUSINESS BITES

■ A COUNCIL that spent an estimated £35million of taxpayer money to build an energy supplier is now selling it. Bristol council will only recoup a ‘proportion’ of the Bristol Energy costs, said a source.

■ HOTEL CHOCOLAT says a surge in online sales prior to Easter has failed to offset the effect of the lockdown. The retailer reported that closing its shops in March has had a ‘material impact’ on trading, revealing it has secured a new £35million loan with Lloyds Bank.

■ WORKING from home is costing the nation an extra £65million a month in energy bills, a study shows. But the £5.04 more it costs us each month is just for boiling the kettle and microwaving food and is a tenth of what most people estimate, Utilita Energy found.