Sunak unveils state-guaranteed ‘bounce’ loans of up to £ 50,000 for small businesses
Small businesses will be able to get a loan worth up to £ 50,000 with the government guaranteeing 100% of the risk in the latest emergency program to help businesses survive the coronavirus crisis.
Chancellor Rishi Sunak said the “bounce loans” would have interest paid by the government for the first 12 months.
Mr. Sunak acknowledged that some small businesses are struggling to access credit and, by guaranteeing the full value of the loan, he hopes lenders will allow businesses to borrow the funds they need.
But he rejected calls for the government to take out other coronavirus loan programs with a 100% guarantee, insisting that his new plan would “carefully target” the level of state support to. those who need it most.
“These are in many ways the companies most at risk from the impact of the coronavirus and often have a harder time accessing credit in the first place.
“If we are to take advantage of their dynamism and entrepreneurship as we recover our economy, they will need additional support to navigate this crisis. “
The new “microcredit program” would provide a “simple, quick, easy” solution, he said.
Mr Sunak added: “Businesses will be able to apply for these new rebound loans for 25% of their turnover up to a maximum of £ 50,000, with the government paying interest for the first 12 months.”
The loans will be available from 9 am next Monday, without “any prospective test of commercial viability, no complex eligibility criteria, just a standard form which is simple and quick for companies to fill out”.
No repayments will be due during the first 12 months of Bounce Loans.
The government has already allocated £ 15bn in support in response to the economic devastation caused by the virus and the lockdown measures, and Mr Sunak has warned of tougher times ahead.
“We should have no doubts about the gravity of the economic situation,” Sunak said.
“The Office for Budget Responsibility has released a scenario showing that the coronavirus will have very significant impacts both nationally and in the global economy.
“Over 1.5 million new claims have been filed with Universal Credit.
“More than four million jobs have been cut.
“Survey data suggests that a quarter of companies have suspended trading.
“These are already difficult times. There will be more to come. “
Speaking at the shipping box for the first time since her appointment, fictitious new Labor Chancellor Anneliese Dodds said it was “disturbing” that the numbers suggest “business confidence has been hit harder. affected in the United Kingdom than through the euro zone ”.
She added, “I have heard from small business owners who have put their life and soul into their business, but they have less than two weeks of cash flow left and they are devastated. We all need to work together to make the different support regimes work for our country, we need to solve this problem.
“I am well aware that many of the conditions to emerge from the lockdown are not within the Chancellor’s grasp, but there are questions her government needs to be open to about blockages on progress and how he will remove them. .
“This applies to the testing, tracking and traceability regime that needs to be in place before key areas can reopen. This also applies to the creation of a national tripartite system to ensure that workers and employers have confidence that they can return to work safely when the time comes. “
CBI Managing Director Dame Carolyn Fairbairn said the program could be “transformational”, adding: “Banks now need to keep working hard to get loans flowing faster.”
Federation of Small Business National President Mike Cherry said, “This crucial new initiative is expected to provide thousands of small businesses with quick access to the working capital they need, helping to protect millions of small businesses. jobs they provide in all parts of the UK.