Chancellor Revamps Coronavirus Loan Scheme
A loan scheme for small and medium sized firms impacted by coronavirus has been overhauled, making it easier for affected businesses to access funds.
The Chancellor has announced the extension of the Coronavirus Business Interruption Loan Scheme to all viable small businesses affected by the pandemic.
In a statement, the government said the move is intended to maximise the support available, promising that all small businesses will be eligible for a loan, should they need finance to keep operating during this difficult time.
New rules will prevent lenders from requesting personal guarantees for loans up to £250,000. The government will also take steps to speed up the approvals process so that firms can get cash into their accounts as soon as possible.
As before, the government will cover the first twelve months of interest and fees, reducing costs for small firms.
Originally, the government pledged to guarantee £330bn of loans on this scheme, but in the first weeks of the pandemic, banks only lent £145m to struggling firms.
Part of the reason for this low uptake was because many small firms were ineligible for the scheme because of government lending rules.
Other business owners complained about high interest rates and unreasonable guarantees, with some accusing banks of trying to take advantage of the crisis.
The banks argued that they were just following government rules for lending.
Miles Grady, Director of said: “Forecasters had warned that up to a million firms could run out of cash within four weeks because many could not access government support. It’s therefore reassuring that the chancellor has taken action to get the economy moving again.
“It’s also reassuring to see bank chief executives come out in support of the changes. This will hopefully translate into a sharp increase in loan agreements over the next few weeks.”