Chancellor Rishi Sunak unveils coronavirus ‘bounce back’ loans for small businesses
Rishi Sunak has unveiled a new state-backed loan scheme for small businesses in a bid to help them “survive” the coronavirus crisis.
But the Chancellor is resisting pressure to ramp up the level of state backing for firms covered by existing loan programmes, despite calls from some MPs for him to go further.
Sunak said the 100 per cent government-backed ‘bounce back’ loan scheme would be up and running in a week’s time, allowing businesses to borrow between £2,000 and £50,000 interest free.
The UK Government will underwrite the full amount of the loan in a bid to encourage lenders to get money out the door, and the Treasury promised that the new scheme would be accessible “through a short and simple form”.
The state will also cover any fees and interest for the first 12 months and no repayments will be asked for during the first year.
Sunak said: “Our smallest businesses are the backbone of our economy and play a vital role in their communities.
“This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.
“This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses.”
However, Sunak resisted calls from some business groups as well as the Labour Party to extend the 100 per cent guarantee to those who have asked for help under the UK Government’s already-up-and-running Business Interruption Loan Scheme.
That programme sees a state guarantee of 80 per cent for loans of up to £5m.
The Chancellor said: “I’ve heard some calls for government to underwrite all our loan schemes with 100 per cent guarantees. I remain unconvinced by the case for doing that universally.”
Speaking in the Commons, he added: “We should not ask the ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sum, to businesses who may, in some cases, have very little prospect of paying those loans back – and not necessarily because of the impact of coronavirus.”
Scottish secretary Alister Jack said: “It is great news that the Chancellor is to provide new UK Government-backed loans to businesses across the UK, with the UK Government guaranteeing 100 per cent of the loans.
“This new scheme comes on top of the unprecedented levels of support we have put in place to make sure that our economy can recover once we get through the coronavirus crisis.”
The scheme was also welcomed by the Federation of Small Businesses.
FSB Scotland policy chair Andrew McRae said: “While the coronavirus business interruption loan scheme [CBILS] – and the modifications to it – have been welcome, there are clearly still issues with how it’s working, or not, for small businesses.
“They’ve found it too difficult to access and the process too lengthy.
“As we have said from the start of this crisis, speed is of the essence if we are to save many of the perfectly viable businesses who are battling severe cash-flow problems right now.
“This new simple fast-track system, which should be up and running from 9am next Monday, could finally get the money moving into small businesses and help them bridge the finance gap.
“If it does, it will prove to be a lifeline for those businesses and the jobs they sustain.”