Mon, 27 Apr 2020 | BUSINESS NEWS
Chancellor Rishi Sunak has today announced a new micro-loan scheme for businesses that will issue loans worth up to 25 per cent of turnover, for as long as coronavirus measures remain in place.
The “Bounce Back” loans will be 100 per cent backed by the government and will be for a minimum of £2,000 and a limit of £50,000. The government will also pay the interest and any fees for the first 12 months, with no repayments being asked for during the first year, Sunak announced.
According to the government, the scheme, which will go live on Monday May 4, will be applied for through a “short and simple” online application form and will bolster existing support packages available to the smallest UK businesses affected by the pandemic.
It has been designed to ensure that such firms can quickly receive vital cash injections in order to keep operating amidst the crisis, with the intention being that loans should reach businesses within days of the application being submitted.
The announcement comes amid criticism of existing schemes, with some companies reporting that they are having difficulty accessing credit. Other schemes, such as the Coronavirus Business Interruption Loan Scheme (CBILS) have only been 80 per cent government-backed, leading to concerns that the 20 per cent risk banks are still being exposed to has made many hesitant to lend.
Announcing the scheme, Chancellor Rishi Sunak said: “Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.”
“This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses”.
Click here to read BSR's article on CBILS and how entrepreneurs can use the scheme to fund investments.
You can also read our piece on the government's announcement of the Coronavirus Large Business Interruption Loan Scheme (CLBILS) here.
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