Sunak backs down and offers small firms 100% loan guarantees

Darnell Taylor
May 30, 2020

The loans - available from Monday - will see the government shoulder the risk with a 100 per cent guarantee for small firms that have struggled to access funding.

The new loans provide high-street banks with a guarantee that the state will refund the bank for the entire value of the loan if a borrower is unable to repay, up from 80% on the government's existing coronavirus business interruption loan (CBILs).

"Our smallest businesses are the backbone of our economy and play a vital role in their communities. They will need extra support to get through this crisis", he said.

THE CHANCELLOR of the exchequer has said the government will review who is benefiting from the funds for small businesses after concerns were raised about the distribution and take up of coronavirus loans among black, Asian and ethnic minority business owners.

Adam Marshall, director general of the BCC, said CBILS decisions needed to be made more quickly and told ministers to keep an open mind over further changes to help debt-averse businesses. Tell us how the COVID-19 pandemic has affected your business, what you think of the government's efforts to help business owners and entrepreneurs, and if you think they need to do more.

Businesses based in the United Kingdom will be able to borrow between £2,000 and £50,000 and should be able to access the cash within days.

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The Bounce Back Loan scheme will launch on 4 May 2020.

This step forward marks another decisive intervention from the Treasury and the Business Department, building on existing support in an innovative way.

UKHospitality chief executive Kate Nicholls said: "Loans must be fast-tracked with minimal restrictions, grants must flow to all businesses that need them regardless of size, and the job retention scheme must be amended to reflect actual earnings". It remains to be seen if banks will manage these loans (presumably they will) and that they will be on the CBILS partner scheme but not acting as CBILS lenders.

"To date, I have not heard of a single business across logistics and supply chain that has been granted a CBILS loan, and time is fast running out for the industry charged with keeping Britain trading", continues Mr Wells. Business leaders will appreciate the government's continued flexibility in adapting their response to what's happening on the ground.

Former Archbishop of Canterbury Rowan Williams was among the senior clergy who called on the Government to follow Denmark, Poland and France in refusing to help companies registered in tax havens.

Meanwhile, the Chancellor has dismissed calls from church leaders for companies that avoid United Kingdom taxes by routing profits through tax havens to be barred from receiving coronavirus support packages.

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