The Chancellor will announce that all viable small firms affected by coronavirus will be eligible for the cash, not just those unable to secure regular commercial financing. He will also ban banks and other lenders from requesting personal guarantees for loans below £250,000. Mr Sunak’s measures follow fears that employers, hit by plummeting consumer demand due to the lockdown, have been struggling to obtain access to the backing announced by the Government last week.
He said: “We are making great progress on getting support to businesses to help manage cashflows, with millions of pounds of loans and finance being provided to hundreds of firms.
“Now I am taking further action by extending our generous scheme so even more businesses can benefit.
“We have also listened to larger businesses affected by Covid-19 and are announcing new support so they can benefit.
“We’ll continue to work with the financial services sector to ensure the £330billion of Government support, through loans and guarantees, reaches as many businesses as possible.”
Treasury figures show more than £90million of loans to nearly 1,000 small and medium sized firms have been approved under the Coronavirus Business Interruption Loan Scheme (CBILS) launched last week.
And a Government-backed scheme to provide financing to larger companies, overseen by the Bank of England, has also provided almost £1.9billion of support to firms with a further £1.6billion in the pipeline.
Mr Sunak will today extend the scheme to many more firms previously not eligible.
He will also fine-tune the scheme, under which the Government pledges to cover the first 12 months of interest and fees, to speed up the approval process for loans. And he will announce a new Coronavirus Large Business Interruption Loan Scheme to make loans of up to £25million to firms with an annual turnover of £45million to £500million.
Loans backed by a guarantee under the scheme will be offered at commercial rates of interest.
Mr Sunak will speak to bank chief executives next week to ensure lenders fall into line.
More than 130,000 inquiries from companies across the UK about business interruption loans have been made, says trade association UK Finance. Some 983 businesses have had finance approved as banks are processing thousands of applications. For loans over £250,000, personal guarantees will be limited to 20 percent of outstanding amounts on CBILS lending after other recoveries from assets.
Business Secretary Alok Sharma said: “The pandemic represents a challenge to businesses unlike any other they have faced and we are determined to support them.”
Adam Marshall, of the British Chambers of Commerce, said: “We’re pleased the Chancellor is responding to the real-world concerns posed by firms.”
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