Government to support new commercial loans of up to £ 10million
The government must support loans of up to £ 10million for businesses in need of support until the end of the year, as its Covid-19 loan programs run out.
Chancellor Rishi Sunak told MPs he is planning a new stimulus loan program to jumpstart businesses.
From April 6, it will replace the Rebound Loan Program (BBLS), Coronavirus Business Interruption Loan Program (CBILS) and its big brother CLBILS.
The Treasury will promise to cover 80% of what the banks lend if the companies do not repay their loans.
Mr. Sunak said, “Some businesses will also need loans to be successful. As the rebound loan and CBIL programs come to an end, we are introducing a new turnaround loan program to take their place.
“Businesses of any size can apply for loans ranging from £ 25,000 to £ 10 million, until the end of this year.”
The new system has the same government guarantee as CBILS and CLBILS, but is less generous than the 100% guarantee for BBLS.
Bounce loans were first unveiled at the end of April last year and became available to businesses days later in early May.
With higher collateral and less stringent lender controls, Bounce Loans proved to be by far the most popular of the three programs, both in terms of number of loans issued and total amount loaned.
As of February 21, more than 1.5 million businesses had received a loan totaling £ 45.6 billion, and another half a million had applied.
The BBLS was intended to quickly channel cash from banks to small businesses, up to £ 50,000 each. The government has given a 100% guarantee on the loans to ensure that the banks are not reluctant to lend.
BBLS, CBILS, CLBILS and the Bank of England’s Covid Business Finance Facility have between them provided tens of billions of pounds in loans to UK businesses.
In September, Mr Sunak promised that a new form of Covid loan program would be introduced at the start of the new year to replace the three programs guaranteed by the Treasury. However, this was subsequently put on hold as infections and deaths increased, leading to more lockdown measures.
The Treasury also said it plans to give HM Revenue and Customs around £ 100million to hire 1,265 new staff to tackle fraud in support programs, including leave and work support programs. independent.
Helen Dickinson, Managing Director of the British Retail Consortium, said: “We hope the loan program will play an important role in addressing the cash flow issues that many businesses are facing.
“But it is essential that the Chancellor’s aspirations are met through the action of commercial lenders to ensure that this important funding reaches its destination quickly.”
Suren Thiru, head of economics at the British Chamber of Commerce, said: “The litmus test of the new system will be whether it is able to support the recovery by channeling credit to the companies that have it most. need.
“The program needs to be tailored from day one to ensure businesses and banks can use it to help SMEs return to growth. Companies will need to adopt an approach to the operation of the new program that is clear, consistent and takes into account the impact of the pandemic on their financial situation. “