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Chancellor Rishi Sunak has announced a new coronavirus crisis aid scheme, offering small businesses up to £50,000 in loans that will be 100% guaranteed by the Government.
The so-called ‘bounce back loans’ will be available from next Monday (4 May), and give the UK’s smallest businesses guaranteed access to loans worth 25% of their turnover, up to a maximum of £50,000.
Simon Toseland, a Director of Prop-Search, said: “According to the Chancellor, there will be no forward-looking tests of business viability or complex eligibility criteria that applicants will have to meet, and most firms applying through the scheme should be able to receive the funds within 24 hours.”
“The loans will be 100% guaranteed by the Treasury, meaning the Government will take on all the default risk, and interest on the loans will be paid by the Government for the first 12 months.”
Mr Sunak said the sums involved meant the Government could meet the risks associated with the scheme as he rejected calls, made by business groups, for the taxpayer to guarantee 100% of other emergency schemes.
Announcing the scheme in the House of Commons, Sunak said: “I know that some small businesses are still struggling to access credit.”
“They are, in many ways, the most exposed businesses to the impact of the coronavirus; and often find it harder to access credit in the first place.”
“If we want to benefit from their dynamism and entrepreneurial spirit as we recover our economy, they will need extra support to get through the crisis.
“Some businesses will not want to take on more debt; which is why our focus has been on cash grants, tax cuts and tax deferrals. But for others, loans will be part of the answer.”
The Government’s Coronavirus Business Interruption Loan Scheme (CBILs) forms part of a £350 billion financial package unveiled by the Chancellor last month to help businesses navigate the Coronavirus crisis.