The government’s Coronavirus Business Interruption Loan Scheme (CBILS) is still failing to protect businesses from across the logistics sector from financial calamity, claims leading business organisation FTA ( Freight Transport association), thanks to the failure of those implementing the scheme to speed decision-making and process applications in good time. And, as David Wells, Chief Executive of FTA explains, June will be “crunch time” for the future of the industry which has kept Britain trading throughout the COVID-19 crisis:
“Lenders continue to stall on making decisions on applications for the loans which are intended to keep our sector afloat, yet government has so far failed to deliver on its promise to push decision making along. In the meantime, logistics businesses are now starting to face emerging holes in their cash flows caused by a lack of billable work from April, when the crisis really took hold. The work that disappeared in April would be due for payment from mid-May onwards, and that’s when the real cashflow crunch will hit. Without successful loan payments from CBILS to bridge the gap between lockdown and the restart of activity, many logistics businesses will simply stop trading.
“FTA’s weekly research of the whole industry shows that almost a fifth of our members are in danger of financial collapse within eight weeks, but only 5% have been successful with their CBILS applications. The survey also reveals that over a third of logistics SMEs are stuck in banking purgatory, either not eligible, unsuccessful, still awaiting a decision, or in need of more information. The government needs to step in now and free up the application process for CBILS to ensure the future stability of the industry that powers all of the UK’s economy.”
On 2 April, Chancellor Rishi Sunak MP announced changes to the government’s Corona Business Interruption Loan Scheme (CBILS), vowing to take “all action necessary” to make sure government backed loans were benefitting businesses as planned. But as Mr Wells continues, rather than taking “all action necessary”, in the opinion of FTA’s members, Mr Sunak is simply not doing enough to support logistics operators who are facing financial ruin because of the lockdown:
“This delay to CBILS approvals is going to get very serious very soon and is already too late for some. The scheme simply is not working for the vast majority of our members who are looking to it for vital business support,” he says. “Lenders are failing to process applications for financial support from stricken businesses quickly enough. The overall application process needs to be much faster, and more transparent, to ensure the necessary funding reaches the businesses that we all rely on to deliver vital goods 24/7.”
“And whilst the creation of Bounce Back loans, announced last week after intense lobbying from FTA, will help the very smallest logistics businesses, it still leaves thousands with no alternative to CBILS for averting their impending cash flow crunch. The banks are clearly still getting in the way of the application process for CBILS, either because they will not accept any risk, or because their processes are taking up too much time, which prevents logistics operators from even making a CBILS claim.”
FTA is one of the UK’s leading business groups, representing logistics businesses which are vital to keeping the UK trading, and more than seven million people directly employed in the making, selling and moving of goods. With Covid-19, Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc. FTA supports, shapes and stands up for safe and efficient logistics, and is the only business group which represents the whole industry, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods. For more information about the organisation and its work, including its ground-breaking research into the impacts of COVID-19 on the whole supply chain, please visit www.fta.co.uk.