- businesses will be able to borrow between £2,000 and
£50,000 and access the cash within days
- loans will be interest free for the first 12 months,
and businesses can apply online through a short and simple
form
Small businesses will benefit from a new fast-track finance
scheme providing loans with a 100% government-backed
guarantee for lenders, the Chancellor announced today
(Monday 27 April).
said the new Bounce Back
Loans scheme, which will provide loans of up to £50,000,
would help bolster the existing package of support
available to the smallest businesses affected by the
coronavirus pandemic.
The scheme has been designed to ensure that small firms who
need vital cash injections to keep operating can get
finance in a matter of days, and comes alongside the £6
billion awarded in business grants, supporting 4 million
jobs through the job retention scheme and generous tax
deferrals supporting hundreds of thousands of firms.
The government, which has been consulting extensively with
business representatives about the design of the new
scheme, will provide lenders with a 100% guarantee for the
loan and pay any fees and interest for the first 12 months.
No repayments will be due during the first 12 months.
The loans will be easy to apply for through a short,
standardised online application. The loan should reach
businesses within days- providing immediate support to
those that need it as easily as possible.
The Chancellor of the Exchequer, , 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.
Business Secretary said:
Our small businesses are vital in ensuring our
communities thrive and will be crucial in creating jobs
and securing economic growth as we recover.
This rapid loan scheme offers additional protection so
small companies across the country can get access to the
finance they need immediately, as part of the
unprecedented package of support we have put in place.
The scheme will launch for applications on Monday 4 May.
Firms will be able to access these loans through a network
of accredited lenders.
The government will work with lenders to ensure loans
delivered through this scheme are advanced as quickly as
possible and agree a low standardised level of interest for
the remaining period of the loan.
Notes
Our Covid-19 support schemes have provided over £15 billion
for business in just a few weeks. We’ve put in place:
- our job retention scheme - more than 500,000 claims
have been made to the value of £4.5 billion
- business grants - half a million business properties
have benefitted from £6 billion of business grants
- the Coronavirus Business Interruption Loan Scheme -
with over 20,000 loans
- the Covid Corporate Financing Facility, which has
provided over £14 billion for larger firms
- generous VAT deferrals worth billions of pounds
- scrapped businesses rates
- covering the cost of statutory sick pay
- the new scheme will run alongside the existing
Coronavirus Business Interruption Loan Scheme (CBILS) and
Coronavirus Large Business Interruption Loan Scheme
(CLBILS)
- We are also taking additional steps on the Coronavirus
Business Interruption Loan Scheme (CBILS) to ensure that
lenders have the confidence they need to process finance
applications quickly, including removing the per lender
portfolio cap for the government guarantee, and changing
the viability tests that so that all banks will need to
assess is whether a business was viable pre COVID-19
Reactions from business
Mike Cherry, Federation of Small Businesses National
Chairman, said:
This crucial new initiative should enable thousands of
small businesses to access the working capital they need
quickly, helping to protect the millions of jobs they
provide in every part of the UK.
This step forward marks another decisive intervention
from the Treasury and the Business Department, building
on existing support in an innovative way. Swift delivery
is now key, and we also look forward to working with
government in the long-term to enhance market
competition, including that provided by non-bank lenders.
We are pleased to see the Chancellor and the Business
Secretary listening to the needs of small businesses, and
we will continue to work with them to make sure small
firms and the jobs they provide are protected throughout
this public health challenge and that small firms are at
the forefront of leading the recovery.
Dame Carolyn Fairbairn, CBI Director-General, said:
The Chancellor’s new 100% guaranteed loan scheme for
small businesses is 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.
Thousands of businesses could be saved by this lifeline.
Banks now need to continue their work in overdrive to get
the loans flowing faster.
It’s good to see the Chancellor listening to business,
proving that where there’s a need to adjust schemes, he
will do what it takes. It will be vital to maintain this
approach in the months to come. Every job saved today
will ensure a faster recovery tomorrow.
Jonathan Geldart, IoD Director General:
This is a welcome intervention, which should help ensure
more firms can access the finance that could see them
through this crisis. Business leaders will appreciate the
government’s continued flexibility in adapting their
response to what’s happening on the ground.
It’s crucial that the government’s support cuts through
to those who need it. Having a quick and simple process
will be vital, and we need to remember that taking on
debt is always a difficult decision for small firms.
Adam Marshall, BCC Director General:
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.
