Christ Yoder
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Isis Sunak’s emergency loan program for businesses struggling to survive the coronavirus pandemic has been revamped after facing strong criticism over access.
More businesses will now be able to access financial support during the Covid-19 lockdown after the Chancellor announced a broader set of measures to help businesses.
The move will allow large companies with turnover of £ 500million to access support, while opening up the availability of state-backed liquidity to small businesses.
And the Treasury has upheld new rules for lenders in an effort to ensure money gets to business owners faster and with less personal risk.
The Treasury has confirmed:
– The introduction of a new Coronavirus Large Business Interruption Loan Program (CLBILS) offering an 80% government guarantee to enable loans of up to £ 25million for businesses with turnover of annual business is between £ 45million and £ 500million
– Ban on banks requiring personal guarantees risking indebtedness on loans under £ 250,000 in order to speed up the lending process and reduce financial risk for applicants
– An extension of the Coronavirus Business Interruption Loan (CBILS) program already underway to allow “viable” small businesses affected by Covid-19 to apply, no longer limiting it to those unable to obtain commercial financing
– Over £ 90million has been paid out to 983 small and medium-sized businesses, with £ 1.9 billion now in the accounts of large companies
– The Chancellor will meet with the managing directors of UK banks to discuss the implementation of the programs next week.
London during coronavirus lockdown – In pictures
Mr Sunak said: “We are making great strides in providing much-needed support to businesses to help them manage their cash flow during this difficult time – with millions of pounds in loans and financing provided to hundreds of businesses. Across the country.
“And now I’m taking further action by extending our generous loan program so that even more businesses can benefit.
“We have also listened to the concerns of some large businesses affected by Covid-19 and are announcing new support so that they can also benefit.
“This is a national effort and we will continue to work with the financial services industry to ensure that the £ 330 billion in government support, through loans and guarantees, reaches as many businesses in the need as possible. “
Business secretary: money must get to businesses as quickly as possible
More than £ 90million in loans to nearly 1,000 small and medium-sized businesses have been approved under CBILS since its inception last week, the Treasury has confirmed.
And a government-backed program to provide finance to large businesses, run by the Bank of England, has also provided nearly £ 1.9bn in business support, with an additional commitment of £ 1.6bn. pound sterling.
It comes after Business Secretary Alok Sharma this week warned banks that it would be “totally unacceptable” if they were found to be “unfairly denying funds to good financially troubled companies”, saying especially in the aftermath of the 2008 taxpayer funded bailouts after the financial crash.
The government has now introduced measures to ensure that financial support is readily available, including for large businesses.
Participants in CLBILS will have 80% of their loan guaranteed by the government but, unlike the plan for small and medium-sized businesses, they will not be given a 12-month leave to pay the interest and fees involved.
For small business loans over £ 250,000, personal guarantees will be limited to just 20% of any outstanding amount on the loan after any further recovery of business assets, with lenders continuing to be prohibited from asking business owners get their homes on the line.
Mr Sharma said: “The changes we are making to the coronavirus business disruption loan program will make it easier for businesses to access the loans we have put in place, helping them continue to trade and protect businesses. livelihoods of their staff. “
Labor welcomed the measures but accused the government of being “late” in implementing the support measures.
Phantom Chancellor John McDonnell said: “I welcome this decision, but the Chancellor cannot stay behind in supporting our economy.
“There are still huge gaps in support for employees and the self-employed which must be addressed immediately if people are to avoid facing serious hardships in this crisis.”
Business bodies including the British Chambers of Commerce, the Confederation of British Industry (CBI) and the Federation of Small Businesses (FSB) have said the measures will help those affected by the slowdown caused by Covid-19.
CBI Managing Director Dame Carolyn Fairbairn said: “The Chancellor’s actions are a big step forward.
“They will help deliver cash faster to businesses struggling to survive in the face of the headwinds of the pandemic.”
Mike Cherry, FSB National President, said: “The removal of personal guarantees for all business loans under £ 250,000 is welcome.
“Going into debt these days is a daunting prospect for many small businesses and the self-employed. “
Work on providing support to charities is underway, the Treasury confirmed, while the Transport Department is said to be in talks with airlines over tailor-made aid.
