HomePoliticsBrexitSmall Businesses 100% Sure To Get £50,000 Bounce Back Loans - Sunak

Small Businesses 100% Sure To Get £50,000 Bounce Back Loans – Sunak

Banking industry body UK Finance said there was a “shared responsibility to take all measures possible to get relief to businesses”.

Small businesses that have been defaced by the coronavirus crises still have hope to bounce back to action following Chancellor Rishi Sunak announcement of an offer of 100 per cent guarantees on “bounce back loans” of up to £50,000.

Although, Mr Sunak downplayed pressure to increase the present 80 per cent guarantee on loans under the Coronavirus Business Interruption Loan Scheme (CBILS) to cover their full value.

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According to businesses, the blame goes to the limit on the guarantee for the slow provision of the emergency credit, which has currently seen just 16,000 CBILs loans issued, compared with more than 250,000 in the equivalent scheme in France, and more than 100,000 in Switzerland.

Chancellor Rishi Sunak explained to the House of Commons that the new micro-loan program is targeted at helping small businesses that are struggling to access fund during the current coronavirus lockdown.

The program will allow companies to apply for bounce back loans, free of interest for the first 12 months, up to the value of 25 per cent of their turnover, with a cap of £50,000. The loan will be available from 9 am next week Monday. According to the Chancellor, there will be nothing like business liability tests or complex eligibility criteria.

Describing them as “ a simple, quick, easy solution for those in need of smaller loans”, Mr Sunak said that most eligible firms will be able to access them by filling out a standard form, with funds available within 24 hours of approval.

Mr Sunak rejected a broader extension of emergency credit guarantees as an unacceptable burden on taxpayers to support businesses which might be unviable even without the blow to trade from coronavirus.

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“I’ve heard some calls for the government to underwrite all our loan schemes with 100 per cent guarantees. I remain unconvinced by the case and for doing that universally.

“We should not ask the ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums to businesses who may in some cases have very little prospect of paying those loans back and not necessarily because of the impact of the coronavirus.

“So I do not think it is appropriate to provide 100 per cent guarantees on all of our schemes. Instead, these new bounce back loans carefully target that extraordinary level of state support at those who need it most. And the £50,000 balances the risk to the taxpayer with the need to support our smallest businesses,” the chancellor said.

Labour’s shadow chancellor Anneliese Dodds described Mr Sunak’s announcement as a “relief” for businesses but added that the UK had “an enormous mountain to climb” to match other countries’ support for smaller firms.

“It’s a relief to hear from the chancellor that he’s listened to calls from this side of the House, business, and others that we need a full guarantee for at least some loans – he stated those of up to £50,000,” said Ms Dodds.

“But we need to be clear the UK has an enormous mountain to climb in this area. Switzerland has a population of under 9 million, yet it approved four times as many loans within its first week than the UK has done in a month.

“We’re running out of time, so can I ask the chancellor how he will ensure that banks back loans and get them to those businesses that need it. How will they get out of the door and what plans does he have to ensure the capacity will be there in banks to provide those loans?”

CBI director-general, Carolyn Fairbairn described the bounce back loan scheme as ”transformational”.

“Sole traders, micro-firms and entrepreneurs will now have a simple route to fast finance to stay afloat, without red tape or time-consuming checks,” said Dame Carolyn. “Thousands of businesses could be saved by this lifeline. Banks now need to continue their work in overdrive to get the loans flowing faster.”

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While British Chambers of Commerce director-general, Adam Marshall said: “The chancellor has demonstrated he is listening to the concerns of our business communities and taking steps to get cash to the front line where it is needed. This new route for our smallest companies to apply quickly and get a fast decision will be crucial to those who have struggled to get a CBILS loan.”

Banking industry body UK Finance said there was a “shared responsibility to take all measures possible to get relief to businesses”.

“Following the changes to the scheme announced today lenders will only ask businesses for information and data they might reasonably be able to provide at speed and we will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability,” said UK Finance.

“Frontline staff have been working tirelessly to get money to those viable businesses that need help and we stand ready to support many more customers in the weeks ahead.”



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17 days ago

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