Rishi Sunak revamps business interruption loans to aid more companies

Fifth of Small UK Companies Could Collapse in Weeks Due to Coronavirus Lockdown        CC BY 2.0  Basher Eyre

The Chancellor Rishi Sunak has this morning beefed up the government's support measures for smaller businesses after severe criticism of his previous announcement last week revealing its Coronavirus Business Interruption Loans Scheme or CBILS.

Eligibility - the business must meet the eligibility criteria as set by the Government to be able to qualify and be able to apply.

Chancellor Rishi Sunak said: "We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this hard time - with millions of pounds of loans and finance being provided to hundreds of firms across the country".

The Corporate Finance Network welcomed the expected easing of restrictions on the loan scheme, but said taking on extra debt was not right for many firms.

In the revamped version, access to the scheme has been opened up to those smaller businesses that would have previously met the requirements for a commercial facility but would not have been eligible for CBILS.

It is thought Mr Sunak will prevent all banks from imposing personal guarantees on business owners for loans under £250,000 - something some of the major players have announced already since coming under pressure.

"The Business Finance Guarantee will help businesses with cashflow and operating expenses, and comes in alongside the $8-12 billion wage subsidy scheme keeping people in jobs, and workers and employers connected during the lockdown".

Too few firms felt able or willing to take on loans that carried an 80% government guarantee to the lender but not the borrower.

The scheme will offer a total of $6.25 billion in loans to New Zealand businesses.

"We look forward to continuing our constructive engagement with government to ensure that debt can be repaid in an affordable way that allows small businesses to recover from this crisis and to thrive again".

Business Secretary Alok Sharma signalled late on Wednesday that the Government would be making changes to the coronavirus loan support scheme in the coming days.

Stephen Jones, the chief executive of UK Finance which represents the banks, told the Today programme: "The changes to the plan were changes we asked for very strongly having had a week of experience of mobilising this scheme at very short notice".

The changes we are making to the Coronavirus Business Interruption Loan Scheme will make it easier for business to access the lending we have put in place, helping them to continue trading and protect the livelihoods of their staff.

This included ensuring interest rates offered to struggling businesses are reasonable and to pass on the benefit of the government guarantee to those borrowing under CBILS.

BCC Director General Adam Marshall said: "We're pleased that the Chancellor is listening and responding to the real-world concerns of firms across the United Kingdom who are urgently trying to access financial support". Alongside, banks are working at breakneck speed to deliver loans to firms most in need.

"We can absolutely do this by incentivising them, supporting them, and with the full backing and incentive of the United Kingdom government".

Mike Cherry, national chair of the Federation of Small Businesses, added: "The most immediate issue threatening the survival of millions of small businesses and the self- employed is severely depleted cash flow".

The chancellor has been forced to overhaul his emergency aid scheme for small businesses amid warnings about a deluge of insolvencies as companies struggle to access funds.



Other news