Businesses turned down for a short-term loan need to ensure the government knows their schemes are not working in reality, according to a developer based near Boroughbridge. 

Paul Heap, who runs Mallard Homes, applied for finance under the Coronavirus Business Interruption Loan Scheme (CBILS), designed to help firms through short-term cashflow difficulties until the lockdown period ends and normal trading can resume. 

However, he said he was turned down by his bank, despite the prospect of an immediate injection of income as soon as lockdown ends. 

Founded three years ago, Mallard Homes was set to have a year of growth, having doubled its workforce to four and taken on new offices at Newby Hall Stables at the start of the year. It was about to complete the sale of the final four homes on one of its construction sites just before restrictions on house moves were brought in by the government.  

Mr Heap said: “As a new company and especially in the industry we’re in, the previous years’ accounts we have made accounting losses.  

“That’s totally expected of our business plan. You spend a lot of money for a long time before recouping that money. The bank said we’ve made losses so on that basis our bottom line of historic accounts doesn’t support any new credit agreement.” 

With another construction site in progress as restrictions were brought in, Mr Heap said the company has been hit on two fronts as work is not currently possible to get those properties ready to sell. The company's construction manager and site manager have been furloughed, while sub-contractors who had been struggling to access supplies have also left site.

However, there had been some positives from the company's experiences. Mr Heap thanked staff at Harrogate Borough Council, who had been quick to process the company’s application for a £10,000 small business grant. 

He also praised Julian Smith, MP for Skipton and Ripon, who he said had stepped in to encourage the bank to respond to his application after several weeks of inactivity. Mr Heap urged other businesses to speak out if they are struggling to access the support promised by the government.

He believes construction and house moves will be among the first areas to have restrictions lifted, enabling the firm to complete the paused sales and resume building soon. In the meantime, he said the company is keen to ensure it has other sources of finance available should the lockdown continue for many more weeks. 

“We’re actively exploring other avenues for finance,” he said. “As a business owner, I remain optimistic and confident we will obtain finance if we need it.  

“We do have some cash in the bank but we’re preserving it. It’s a buffer we’re looking for.”