Coronavirus: Emergency business loan scheme revamped after criticism

Cornelia Mascio
Апреля 3, 2020

"We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this hard time - with millions of pounds of loans and finance being provided to hundreds of firms across the country", Mr Sunak said.

Mr Sharma said: "The changes we are making to the Coronavirus Business Interruption Loan Scheme will make it easier for business to access the lending we have put in place, helping them to continue trading and protect the livelihoods of their staff".

Previously, government-backed loans for small businesses were only available to firms that had been turned down for a commercial loan from their bank. This will give banks the confidence to lend to more businesses which are impacted by coronavirus but which they would not lend to without CLBILS.

The Corporate Finance Network welcomed the expected easing of restrictions on the loan scheme, but said taking on extra debt was not right for many firms.

This included ensuring interest rates offered to struggling businesses are reasonable and to pass on the benefit of the Government guarantee to those borrowing under the Coronavirus Business Interruption Loan Scheme. We have also listened to the concerns of some larger businesses affected by COVID-19 and are announcing new support so they can benefit too.

"This is a national effort and we'll continue to work with the financial services sector to ensure that the £330bn of government support, through loans and guarantees, reaches as many businesses in need as possible". The Treasury has announced new rules, meaning business owners asking to borrow less than £250,000 will no longer have to offer up personal guarantees. And a government-backed scheme to provide financing to larger companies, being operated by the Bank of England, has also provided nearly £1.9 billion of support to firms and a further £1.6 billion has been committed.

And he is set to take to task lenders who try and charge sky-high rates a year down the line.

The head of the Confederation of British Industry, Carolyn Fairbairn, described the changes as a "big step forward" although she said more detail was needed.

Steve Turner, Unite assistant general secretary, said: "The evidence suggests that banks are still holding out on interest free, guaranteed loans backed by government in favour of commercial loans for otherwise viable businesses".

Each week brings unprecedented levels of economic support and it's encouraging to see the Government stepping in where urgent help is needed.

"If they can do it, why can't the banks?"

He added: "This is a national emergency".

Stephen Jones, the chief executive of UK Finance which represents the banks, told the Today programme: "The changes to the plan were changes we asked for very strongly having had a week of experience of mobilising this scheme at very short notice".

In fact, this demand for personal guarantees, which so alarmed the owners of small businesses desperate for the help, was actually stipulated by HM Treasury and its partner the British Business Bank: the original documentation for the scheme said the lending banks had to use their "normal lending criteria".

"This change is extremely welcome and it means that banks will not be forced to make very unenviable assessments in terms of who cannot or can access the scheme in terms of viable businesses out there".

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