A Salford-based hairdresser has described her regret at taking a government hardship loan, available to small businesses struggling during Covid-19, on online shopping.
Agnes Adeniran, 37, who works at Little Hulton District Centre, Salford, is unhappy with the way she has spent the £50,000 business hardship loan she received to reinstate her small business buying designer clothes and shoes during the lockdown.
Ms Adeniran was among the 83,000 businesses who benefited from the business hardship loan amidst the coronavirus outbreak, unlike other business owners, who spend the hardship loan as instructed by the government, Agnes spent more than half of the loan on “unnecessary” items like shoes and expensive clothes on Selfridges website.
Agnes said: “l regret taking the loan, though, my intention was to refurbish the entire business and stuck up ahead of new year. But things keep going from bad to worse when the prime minister announced the second lock down in October.
“It was tempting to have such amount of money in your bank account and not touch it.
“At first, I literally just bought a pair of shoes for my birthday in September and since then, the online window-shopping kept me in loop.
“I only realised how much unnecessary materials I have spent over £36,400 on when I picked up one of many dresses I bought from the website, which turned out to be £2,600.”
The £50,000 BBLS announced by Chancellor on Monday 27, April was intended to serve as relief for small businesses who are badly affected due to Coronavirus global pandemic.
1/ Today, we're announcing a new loan scheme. A simple, quick, easy solution for those in need of smaller loans.
Businesses can apply for new Bounce Back Loans up to a maximum of £50,000, or 25% of turnover, with the government paying the interest for the first 12 months. pic.twitter.com/aBYcUkR9sR
— Rishi Sunak (@RishiSunak) April 27, 2020
According to National Audit Office, the Government has faced a potential loss of £15 billion to £26 billon through businesses not being able to repay the loan and fraud.
Government estimates that 35%-60% of borrowers may default on bounce back loans.
Assuming the scheme lends £43 billion, this could cost government £15 billion to £26 billion, but these estimates are highly uncertain.
— National Audit Office (@NAOorguk) October 7, 2020
In Agnes’ opinion, the BBLS should have waited until the government purse is back to normal.
She said: “The government should have at least allowed business access to this fund when the country is back in shape and business activities are reinstated.
“By then, the key focus on every business owner list will be, how to start all-over again when Covid-19 is out of the league.
“That’s when the money will be useful, not now when we have no clue what tomorrow holds.
“The spirit of money is breath-taking when you have it and can’t spend it,” she added.
In response to the Prime Minister’s 4-weeks national lockdown for England on Friday 30, October, the Chancellor extended the Bounce Back Loan Scheme (BBLS) for the second time. With the deadline moved to Sunday 31, January.
To help more businesses access additional support, deadlines for applications to our government-backed loan schemes and the Future Fund have been further extended until 31 January 2021. pic.twitter.com/UhrZZtQKxQ
— Rishi Sunak (@RishiSunak) November 2, 2020