Moves to quicken support
Rescue loan scheme revamped after criticism
Liz Cameron: ‘remove barriers and prohibitive loan conditions’ (pic: Terry Murden)
Chancellor Rishi Sunak has rejigged his emergency loans scheme for businesses after criticism that it wasn’t working.
The Treasury said it had received more than 130,000 enquires from firms seeking access to the business interruption loan scheme but fewer than 1,000 had been approved.
Mr Sunak’s government-backed loans for small businesses were only available to firms that had been turned down for a commercial loan from their bank. That led to businesses being asked to pay interest rates of up to 30%.
Following the changes to the scheme, applications will not be limited to businesses that have been refused a loan on commercial terms. However, the Treasury did not announce restrictions on the interest rates that banks can charge for loans.
The revamped scheme will offer government-backed loans of up to £25m to firms with revenues of between £45m and £500m.
Larger firms with a turnover of up to £500m will also be eligible for more help.
Rishi Sunak: ‘we are making great progress’
“We have also listened to the concerns of some larger businesses affected by Covid-19 and are announcing new support so they can benefit too,” said Mr Sunak.
Banks will also be banned from asking company owners to guarantee loans with their own savings or property when borrowing up to £250,000.
“We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country,” the Chancellor Mr Sunak said.
“And now I am taking further action by extending our generous loan scheme so even more businesses can benefit.”
Dame Carolyn Fairbairn, CBI Director-General, said: “The Chancellor’s measures are a big step forward. They will help deliver cash faster to firms battling for survival in the headwinds of the pandemic.
“By providing more support for mid-tier companies, they are backing our most significant and iconic regional employers.
“These firms number in the thousands and make a huge contribution to the economy, so it’s good to see them getting the support they deserve. More detail and a clear time frame are still needed, but this plan is hugely welcome.
“Reforms to the CIBL scheme for firms up to £45 million will simplify the process and make it easier for loans to reach smaller businesses struggling for cash. Alongside, banks are working at breakneck speed to deliver loans to firms most in need.
“Each week brings unprecedented levels of economic support and it’s encouraging to see the Government stepping in where urgent help is needed. This will need to continue as the challenges of this health and economic crisis unfold.”
Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “Businesses which have been successful and viable need cash injections quickly and on fair conditions, and our banking industry has a critical role to play to support these businesses through this crisis.
“Our ask is clear: remove barriers and prohibitive loan conditions to protect businesses and jobs. One immediate way of doing this is by committing to provide unsecured lending through CBILS for facilities of £250,000 and under.
“The Chancellor must also set out in detail the requirements for businesses to access this vital loan facility to ensure that all banks are playing by the same rule-book.”