Research among construction businesses of all sizes and types has revealed a serious logjam in loan applications and a high-level of rejections.
Construction leaders warn a cash crunch will hamper the return to work and trigger a wave of business failures.
The Construction Leadership Council’s Covid-19 Taskforce survey found just 12% of applications for Government-supported loans have been approved so far.
Around 30% of applications have been knocked back, while 58% of firms remain on tenterhooks awaiting a decision.
Finances are under pressure from both the current suspension of many projects, and the need to invest soon to restart works.
Small and medium-sized firms are particularly hard-hit as they often do not have the resource to wade through the current application process, shutting them out from much-needed support.
The task force proposes that simple guidance is made available, helping businesses to get a decision.
Some small businesses will benefit from the recently announced Bounce Back Loan scheme, but many construction firms will be looking for support above its £50,000 threshold.
Now construction leaders are calling on Government to step in and guarantee 100% of loans under the Coronavirus Business Interruption Loan Scheme.
This would ease pressure on banks to run a fine-tooth comb over every application, speeding up the release of funds that could save SMEs across the sector.
The taskforce also recommends that banks should prioritise applications from firms supporting essential works – like hospital and utilities construction – if they are facing immediate hardship.
CLC joint chair Andy Mitchell said: “The Government has done an astonishing job putting in place ground-breaking financial support to UK businesses in very short order.
“The Coronavirus Business Interruption Loan, Coronavirus Large Business Interruption Loan Scheme and Covid-19 Corporate Financing Facility are a shot in the arm for our sector and UK plc.”
“We want to help make sure this vital support makes its way into the industry, providing short-term liquidity as companies get back to work after the Covid-19 crisis.
“We hope to work with the Government and lenders to make sure this happens”
Hannah Vickers, chief executive at the Association for Consultancy and Engineering said: “We looked at Germany which has a single streamlined process only doing its own checks on loans above €3m and on a fast-tracked self-certificated basis for loans below €10m.
“By moving towards a similar model in the UK we can save many vulnerable businesses in our sector”
