Banks help over 100,000 small businesses, but 75% in trouble anyway

Dutch banks have given financial support to some 105,000 entrepreneurs and 17,000 consumers since the outbreak of Covid-19 began in the Netherlands, the Dutch Banking Association (NVB) announced on Thursday. Yet, despite the extensiveness of these loan programs more than three-quarters of all small businesses in the country say they are running into financial difficulties, a survey from the Dutch Chamber of Commerce (KvK) reveals.

The banks hope to resolve at least one hurdle for many small businesses by processing more financial assistance applications faster than they have since the government measures were revealed last month, something the banks themselves see as being an issue.

“Thousands of employees at banks do everything possible under these circumstances,” explains NVB chairman Chris Buijink. “They do this diligently and as quickly as possible. But of course you can never do it fast enough under these circumstances. The need is high."

The financial support given out by Dutch banks comes over and above the grants that already form part of the government's support package. Combined, both of these support measures seem to be having only a limited effect on the economy, as the KvK's new figures reveal.

According to the findings, over three-quarters of the nearly 3,400 respondents indicated that the extension of social distancing restrictions until Apr. 28 has worsened their financial situation. This figure to become even gloomier the smaller the business gets. According to the KvK, 80 percent of businesses which employ 10 people or fewer expect to experience financial difficulties as a result of the measures.

“The corona crisis has hit hard in many industries," Buijink says. "Many companies are faced with loss of turnover and have an acute need for liquidity. We hear back that postponement of repayments on current loans comes in handy, also in the prelude to the one-and-a-half meter economy.”

For the most part, Dutch banks are giving financial support to small businesses in the form of a deferral of repayment on existing business loans, usually for a six-month period. Alternatively, some businesses opt for the BMKB-C program, an extended loan guarantee for small and mid-sized businesses which is heavily backed by the government if the recipient is unable to pay it back.

So far, while a significant majority of the financial support has come in the form of repayment deferrals, the NVB foresees the number of businesses requesting one of the SME loan guarantees will rise "by several thousand" in the coming weeks.