Chancellor Rishi Sunak moves to support business by bolstering interruption loans for companies with a turnover between £45m and £500m
The UK government announced on Friday 3 April that it is taking further action to support firms affected by the covid-19 crisis through a new scheme for larger companies while bolstering business interruption loans for small businesses.
- new scheme announced to bolster support for larger firms not currently eligible for loans
- Chancellor emphasises importance of banks moving quickly to support the economy, jobs and businesses
- current loan scheme extended so more small businesses can benefit
- lenders banned from requesting personal guarantees on loans under £250,000
- £90m of business interruption loans approved for nearly 1,000 firms and £1.9bn corporate finance provided to firms hit by covid-19
- Chancellor will be speak to bank bosses next week to discuss how the schemes are working and ensure everybody is playing their part
The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will ensure that more firms are able to benefit from government-backed support during the crisis. It will provide a government guarantee of 80% to enable banks to make loans of up to £25m to firms with an annual turnover of between £45m and £500m.
The Treasury said the move will give banks the confidence to lend to more businesses that have been hit by covid-19 but which they would not lend to without CLBILS. Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later this month.
At the same time, the Treasury said that to maximise the support available, the Chancellor is extending the original Coronavirus Business Interruption Scheme (CBILS) so that all viable small businesses affected by covid-19, and not just those unable to secure regular commercial financing, will now be eligible should they need finance to keep operating during the crisis.
The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. The government will continue to cover the first 12 months of interest and fees.
There have now been over 130,000 enquiries from businesses across the country for business interruption loans, according to latest figures from UK Finance. Some 983 businesses have had finance approved, while banks are processing thousands of loan applications.
The Chancellor said that the scheme changes will help banks approve loans for the smallest businesses as quickly as possible. He will also be speaking to bank chief executives next week to discuss how the schemes are working and ensure everybody is playing their part.
Last week, the Chancellor and Andrew Bailey, the governor of the Bank of England, wrote to banks asking them to support small and medium-sized enterprises in any way they can. This included ensuring interest rates offered to struggling businesses are reasonable and to pass on the benefit of the government guarantee to those borrowing under the CBILS.