Chancellor unveils new measures to SME loan scheme
The chancellor is extending the coronavirus loan scheme for small and medium businesses who have been affected by the disease.
Originally posted by Xeinadin Group The government's Covid Business Interruption Loan, a funding package, was originally created for firms who were unable to secure regular commercial financing during the economic downturn of the virus.
But now Rishi Sunak has extended CBILS to all viable small and medium business who have faced financial difficulty during the COVID-19 pandemic.
The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. Since 23 March, around 1,000 loans worth around £90m have been processed.
The number is expected to increase in the coming days and weeks as banks get used to the new system.
Rates charged to firms for loans are also expected to be kept as low as possible - given that the Bank of England's base rate is at a record low of 0.1% and that the state is guaranteeing them. However there will not be a cap on the rates banks can charge.
The issue is among those to be discussed when the chancellor holds talks with bank chief executives next week.
The chancellor also announced a new measure for bigger companies. The Covid Large Business Interruption Loan Scheme will offer loans of up to £25m to firms with an annual turnover of between £45m and £500m, also 80% guaranteed by the taxpayer.
Mr Sunak said: "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.
"And now I am taking further action by extending our generous loan scheme so even more businesses can benefit. 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.
"This is a national effort and we'll continue to work with the financial services sector to ensure that the £330 billion of government support, through loans and guarantees, reaches as many businesses in need as possible."
The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. It previously pledged to cover the first twelve months of interest and fees.
Adam Marshall, director general of the British Chamber of Commerce, praised the new measures. He said: "We're pleased that the Chancellor is listening and responding to the real-world concerns posed by firms across the UK who are urgently trying to access financial support.
"Improvements to the Coronavirus Business Interruption Loan scheme will help firms get access to cash more quickly, and the announcement of a new loan scheme for mid-sized companies closes a significant gap in existing support.
"Chambers of Commerce will continue to work with government and the banks to ensure that support reaches businesses at the front line."