Small businesses are at risk of collapse due to stringent eligibility rules for emergency coronavirus loans, the boss of a London marketing agency rejected for a loan has warned.
Richard Cox, co-founder of The Village Communications, accused banks of a “complete lack of interest” in helping small firms that were struggling to stay afloat during the crisis.
Cox and his business partner Deidre MacNair applied for a loan from Barclays through the coronavirus business interruption loan scheme (CBILS). The scheme was set up to help firms with a turnover of up to £45m survive the coronavirus lockdown.
However, Barclays rejected their application when it found the marketing firm was deemed to be an “undertaking in distress” under European Commission rules.
The Village fell narrowly into debt at the end of last year, largely due to two large client cancellations in December.
However, Cox said money another client still owes the firm would have put it back in the black. And the company had shown Barclays it could pay back the coronavirus loan by the end of 2021.
“It was basically ‘computer says no’ from the beginning,” said Cox. “Everything could fall apart for us, and they [Barclays] know that but they just don’t care.”