Small businesses fear support loans will add to their worries
'When you do not know what sort of business we will be going back to, how can you take on more debt?'
30 April, 2020 — By Helen Chapman
Irit Reed and husband David
SMALL businesses fear government offers of coronavirus loans will only lead to a mountain of debt at a time when the future remains uncertain.
Immediate grants of around £25,000 are already running out for some, as the lockdown continues and traders face weeks without income.
New government-backed loans are free for the first year, but accrue interest after that.
Irit Reed, owner of the Chamomile Café in England’s Lane, Belsize Park, said: “It leaves so much to the unknown – no one has got a crystal ball. It is the unknown that makes it fearful – it could be short-term gain and long-term pain. When you do not know what sort of business we will be going back to, how can you take on more debt?”
She added: “The cost of living is rising, prices are going through the roof, then there’s the matter of Brexit and what that will mean for businesses. We have got to think about what is to come.”
Initially the café put in place a plan to do a take-away and delivery service but have since furloughed all five members of staff through the government’s job retention scheme to save costs and ensure safety. Ms Reed said she had used business rate relief and the £25,000 grant to cover equipment leasing costs and costs of utilities.
Chamomile in England’s Lane
Ms Reed and her husband David bought the well-known business three years ago. “We’ve tried to maintain Chamomile as Chamomile is known and stayed true to what the locals love about it,” she said. “There was a deeper attachment to this business. It makes it a little tougher to close.”
They have set up a crowdfunding page calling regulars to help with funds if they can. “There is one customer who said to us when we were going to close they were going to donate every week what they would usually spend and they have done just that,” said Ms Reed.
“I can’t express in words how amazing it is they have done that for us.”
Other businesses in the area say insurance claims for business interruption are being rejected.
Sam Larkin, owner of the NuYu salon in Primrose Hill, said: “I think it’s important the chancellor realises the issues a lot of us are facing. Rishi [Sunak] advised that the insurance companies would do the right thing by their clients. But it feels like some of the insurance companies are hiding behind jargon.”
She added if the claim was not paid, she would “need to re-evaluate if I need to take out a loan”, adding: “I fully realise there is a fine balance between the health of the country and the wealth of the country and we have to find that balance, which is not an easy.”
Ms Larkin thanked Camden Council for quickly processing her small business grant. Mr Sunak said new loans of up to £50,000 would now be “100 percent guaranteed by the government” with “a standard form so it will be much easier for a business to tick the boxes and if they are eligible, they will get their cash very quickly.”