Research exposes gaps in business support as half of companies turned down for loans

General Election – Documents Stock

More than half of hospitality businesses applying for government loans during Covid-19 have had their bids turned down, according to new research from UKHospitality.

The survey, in which businesses were asked about their experiences of accessing loans, insurance claims, grant payments and workforce issues, found that 48% of hospitality businesses have applied for loans.

Of those that have received a response, 57% have been rejected, after often having to wait over two weeks for a reply (54%).

Story continues below

More than half of applicants (53%) are still waiting on a response.

Government-imposed State Aid rules account for over a quarter (26%) of rejections, alongside banks telling business to exhaust their own capital first (28%).

Nearly three-quarters (74%) of businesses have claimed, or intend to claim, for business interruption insurance.

However, their chances of success appear limited: fewer than 1% of businesses that have claimed have received pay-outs.

Only around a quarter of eligible businesses had received hospitality grants, which falls significantly short of Government estimates. UKHospitality has been urging for these loans to be expedited and extended to more businesses.

In terms of workforce, redundancies have been kept to a minimum (2%), with the majority of businesses furloughing staff, accounting for 84% of sector employees.

This demonstrates the huge success of the Government’s job retention scheme, and the need for it to be extended as the recovery begins.

Kate Nicholls, UKHospitality CEO, commented: “These findings lay bare the extra work that needs to be done by governments, banks and landlords to make sure as many businesses as possible can survive this crisis.

“Governments across the UK have provided unprecedented support to assist hospitality through this crisis, and that is extremely welcome. Yet, we are in this for the long haul. Everyone is rightly looking to how the economy and the industry restarts in a way that avoids a return of this horrific pandemic. Before we get to recovery, we need to make sure that the support measures already announced are getting through to business.

“Loans must be fast-tracked with minimal restrictions, grants must flow to all businesses that need them regardless of size, and the job retention scheme must be amended to reflect actual earnings.”

The survey analysed 378 responses, covering the operators of nearly 21,000 outlets employing over 370,000 people.

Around 11% of industry businesses remain open mainly in the (takeaway) restaurant sector, contract catering and hotels.

Tags : businesscoronavirusGovernmenthotelsloanssurveyUKHospitality
Zoe Monk

The author Zoe Monk

Leave a Response