contractors, contracts, BESA

The Building Engineering Services Association (BESA) is urging contractors to review their contracts so supply chains can work together to manage inevitable delays to projects during the coronavirus crisis

Many sites are shutting down in response to government’s lockdown announcement earlier this week (23 March). A large number of contractors now report that around 75% of their work is now suspended with others saying they expect to be fully shut down by the end of the week.

This raises the question of how contractors can access business interruption loans with many concerned they were being asked by some of the banks to supply security that could put them at future financial risk.

Government support

The chancellor Rishi Sunak confirmed that the government was supporting interest-free loans of up to £5m for 12 months to help see firms through the crisis, with banks covered for up to 80% of the losses if the businesses are unable to repay.

However, it has been reported that some banks are intending to charge interest on the loans and requesting personal guarantees from business owners.

Advice for BESA members

Debbie Petford, BESA’s legal and commercial director advised members not to give personal guarantees that could put their assets at risk if there was a problem with repaying the loan.

Debbie said banks were not allowed to use someone’s main residence as security but may ask for stocks and shares.

BESA’s legal and commercial director Debbie Petford said: “Firms should confirm the correct method for notifying delays under the terms of their contract.”

Debbie added that many contractors were now entering into deeds of suspension with their clients where both parties agree to suspend their obligations and work out how to apportion risk.

David Frise, BESA’s chief executive, said: “We are bound to see some examples of bad behaviour, but overwhelmingly we are seeing the best of people during this crisis.

“Supply chains are working together to get through it and to ensure that projects can quickly get back up to speed when the crisis is over.”

The webinar also heard from BSS commercial director Sue Greatorex, who said initial confusion around the supply of materials had been cleared up with her organisation receiving a letter of authority from the government allowing them to keep supplying to essential sites and services.

Greater restrictions

BSS has closed down all its branches but given permission to re-open and materials are now getting through to priority sites. Restrictions have been put into place with delivery workers having to maintain safe distancing, but the system was now working.

Deliveries no longer have to be signed for and many are taking place via kerbside phone and collect methods. Some delivery drivers are being stopped by the police and so must carry details that prove they are delivering to key sites. She asked customers to be clear about this in their orders so the relevant evidence was available.

Greatorex also explained that all BSS support staff were working from home so were available to answer customer queries.

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