How many businesses will default on their coronavirus emergency funding?

[lookingforadvice]

The UK government has guaranteed literally billions of pounds in coronavirus emergency funding for businesses. Indeed there is a new scheme coming out on 4 May which will see the government guarantee loans for small businesses. How many businesses do you think will default on their coronavirus emergency funding leaving the government to foot the bill?

 

[Employer]

Interesting question and will the government cover all of the inevitable loses incurred by the banks? If you remember there was a little bit in the scheme fine print suggesting loans should only be made if the business was viable as at 31 Dec 2019.

 

[lookingforadvice]

I know of a friend who was refused one of the financial support packages because they were behind with their business rates so it is happening. I am not so sure the bounce back loan scheme is as limited - what I am hearing is that it may not even depend upon a persons/business credit rating. Who would pay back the loan if the business was to fold?

 

[Employer]

That’s a tricky one, if the business is not viable then does it make sense to throw taxpayers money into the pot? Then again, without a boost from taxpayer funded bailout packages the company is dead and buried and one more person on the unemployed list.

 

[Needhelp]

The longer this goes on the more chance of some companies struggling to get going again. Cashflow will be a huge issue when we return to any degree of "normality" and there could be some pain ahead for employees.

 

[Goingitalone]

If you take a step back and think about it, whether the coronavirus bailout funding is used to keep a business afloat, pay off creditors or spend on the economy, surely that is the whole purpose?

 

[TruemanBrown]

A lot.

The interesting thing though is will the Government foot the bill. The banks should have done credit checks on their customers which do not appear to have happened. Will the Government use this as an excuse not to cover the bill?

 

[joan123]

If you step back and consider it, certainly that is the entire point of the coronavirus bailout funds, whether it is used to finance the economy, pay off creditors, or keep a business afloat.