Doubts are emerging over the government’s loan scheme, with bank applications insisting on director personal guarantees.
The offer leaves hospitality bosses facing the unsavoury prospect of securing their personal wealth against the loan, as they face several months of zero income, and the possibility of a deep recession.
Tim Cundy, the former CFO at Tasty, suggested the scheme was “not really all it was cracked up to be”.
He said: “It’s not a great option for hospitality businesses on the front line which was one of the reasons for these loans.
“We’re likely to see the shut down of restaurants for the next three months.
“On the other side of this we’re in a deep recession. We don’t know what life looks like. If the business cannot pay back the loan, you personally go bust to repay it.
Cundy said he hoped banks would relax their stance.
Josh Mendez of commercial finance brokerage Rangewell agreed borrowers “are not getting a free ride”, with loans requiring combinations of personal guarantees, debenture and tangible security.
He said operators which were EBITDA negative last year would be unlikely to get the loan.
Loans in the scheme are limited to a maximum of 25% of 2019 turnover or double the annual wage bill, whichever is greater, he said.
Precis
Doubts emerge over loan scheme
Doubts have emerged over the government’s loan scheme, with bank applications insisting on director personal guarantees. The offer leaves hospitality bosses facing the unsavoury prospect of securing their own assets against the loan, as they face several months of zero income, and the possibility of a deep recession. Tim Cundy, the former CFO at Tasty, suggested the scheme was “not really all it was cracked up to be”.
