4 Ways Financial Institutions Are Helping Businesses During the Covid-19 Crisis

Across the UK, a quarter of businesses have had to close their doors as a result of the Coronavirus. Some of these businesses will only be closed in the short-term, while some smaller businesses are losing so much business that this crisis could spell the end of their business.

Gyms, restaurants, bars, nail salons, barbershops, non-food stores, and many other businesses, including independent contractors, are all forced to shut down in compliance with social distancing regulations being enforced.

This has lost too many people losing jobs or being furloughed, and a lot of businesses are seeing huge drops in cash flow. Thankfully there are some measures in place to aid these businesses.

Here are a few ways these institutions are helping.

Debt relief programmes

Many of the major banks and credit card companies are providing limited, but convenient, debt repayment options for businesses hard-hit by COVID-19.

For those who have loans, mortgages and other debts, some banks have decided to put their repayments on-hold until the situation becomes clearer or until things improve. These short, usually 3-month breaks in payments known as a ‘payment holiday’ and for some businesses these are going to make a huge difference.,

This is a major relief to businesses that are expected to make repayments every week or every month, but which will not be able to do so because their businesses are shut down as a result of COVID-19.

Loans provision

Big money lenders in Britain have been encouraged to provide loans to businesses affected by COVID-19, particularly those who may face permanent closure if they cannot find the cash to keep their business afloat.

So, now many banks and credit societies are rolling out different loan programmes. Most notably is the coronavirus business interruption loan scheme for businesses. With such schemes, businesses can access between £50,001 and £5 million on a term loan. Businesses will not be charged any interest payments for the first 12 months, and the Government will reimburse the banks. Businesses will also not be asked to make any capital repayments for at least six months.

This scheme, amongst others, could be a saving grace for many businesses, both small and large.

Interest and fees deferrals

Growing numbers of banks and credit unions are intensifying efforts to support small business clients, including allowing deferment of fees and interests for small companies facing financial distress because of COVID-19. Banks are allowing interest payment deferrals, in some cases, available for up to 90 days, with no effect on credit score.

Hard-hit small businesses may also benefit from temporary payment relief, including late payment and fee waivers. In fact, a number of banks have for a period of time suspended late fees on small business loan payments, providing borrowers with an opportunity to adjust to shifts in the workplace.

Many financial institutions are quickly adapting to the pandemic and going beyond their regular remit to help their customers. Hopefully, the above-mentioned support and ongoing financial support from the Government can help your businesses get through this tough situation and emerge stronger.