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UK says banks must not refuse funds to good firms in trouble over coronavirus

LONDON (Reuters) – It would be unacceptable for banks to unfairly refuse funds to good businesses that are in difficulty because of the coronavirus pandemic, Britain’s business minister Alok Sharma said on Wednesday.

The British government has committed hundreds of billions of pounds to help businesses through the almost total shutdown of the economy because of the pandemic – most notably through a 330 billion pound loan guarantee scheme.

“It would be completely unacceptable if any banks were unfairly refusing funds to good businesses in financial difficulty,” Sharma told a news conference.

Last week, anxious business-owners flooded social media with complaints about restrictions on access to the government’s Coronavirus Business Interruption Loan Scheme and the pace at which some mainstream banks are supplying emergency credit.

“Just as the taxpayer stepped in to help the banks back in 2008, we will work with the banks to do everything they can to repay that favour and support the businesses and people of the United Kingdom in their time of need,” Sharma said.

The government and the Bank of England have already written to bank chiefs to tell them to keep lending and support the economy through the crisis.

Britain’s finance ministry is in daily contact with banks and was being very clear that the existence of government loan guarantees means they should help their customers, an official at the ministry said.

“The Chancellor and the Governor (of the Bank of England) … wrote to banks last week and there will be further contact in the coming days,” the official added.

Sharma also said the government had listened to businesses’ concerns about the scheme and that an announcement on this would be made in the next few days.

“This is a brand new scheme, and, as with all new schemes, it will not be perfect from the outset,” Sharma said.

(Reporting by Costas Pitas, Elizabeth Howcroft and William James, additional reporting by William Schomberg, editing by Estelle Shirbon)