Chancellor Rishi Sunak announced the latest government-backed scheme to help small businesses struggling to stay afloat during the coronavirus pandemic
Sunak announced the latest government-backed scheme to help small businesses
struggling to stay afloat during the coronavirus pandemic
As COVID-19 continues to rip through the country, thousands of businesses across the UK are struggling to access financial help during this difficult time. Now, the government has announced a new coronavirus aid scheme offering small businesses up to £50,000 in loans that are 100% guaranteed by the government.
On Monday, Chancellor Rish Sunak announced the new micro-loan scheme offering businesses "bounce back” loans amid fears thousands of small firms are running out of cash during the coronavirus outbreak. Businesses can apply for these new “bounce back” loans for 25% of their turnover, up to a maximum of £50,000 with interest paid for by the government for the first 12 months. This comes after thousands of British businesses are struggling to access credit during the coronavirus lockdown. According to reports, several banks have been hesitant or slow to lend money to SMEs under the Coronavirus Business Interruption Loan Scheme (CBILS) because they were liable for 20% of the risk. Now, the new micro-loan scheme will be 100% backed by the government unlike the CBILS, which is only 80% state-backed. Also, applicants will not need to face any viability tests but may have to undergo certain fraud checks, Mr Sunak said.
"Businesses will be able to apply for the new bounce back loans for 25% of their turnover up to a maximum of £50,000 with the government paying the interest for the first 12 months," the chancellor said. Businesses and banks have lashed out the CBILS scheme for the slow provision of emergency credit compared to equivalent schemes in France and Switzerland, which have seen thousands more loans issued to struggling businesses. Despite the criticism, Mr Sunak insisted the UK’s financial packages helping businesses during the coronavirus lockdown were among the best in the world.
"Around half a million employers have already applied for help to pay the wages of over four million furloughed jobs," he said. From 9 am on May 4, small and medium-sized businesses can apply for the scheme by filling out a short online form with funds deposited into bank accounts within 24 hours, the government has said. The scheme will be delivered through a network of accredited lenders and loan terms will be up to six years, and the government will work with lenders and agree to a low-interest rate for the remaining period of the loan.