Chancellor Announces Enhanced COVID-19 Loan Support for UK Businesses
The Chancellor, Rishi Sunak is taking further action to support businesses affected by the coronavirus crisis by bolstering business interruption loans for small businesses and announcing a new scheme for larger companies.
Since launching, loans of more than £90 million have already been approved under the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) – which provides access to finance of up to £5 million – for nearly 1,000 small and medium-sized firms. A separate government-backed scheme providing finance to larger companies, operated by the Bank of England, has also provided almost £1.9 billion of support to businesses, with a further £1.6 billion committed so far.
To maximise the support available, the Chancellor is extending the CBILS so that all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, will now be eligible, should they need finance to keep operating.
The Government is also stopping lenders from requesting personal guarantees for loans of under £250,000 and making operational changes to speed up lending approvals. The Government will continue to cover the first twelve months’ interest and fees. For loans over £250,000, personal guarantees will be limited to just 20% of any amount outstanding on the CBILS lending after any other recoveries from business assets.
Lenders were already prohibited from asking business owners to put their house up as security. The changes to the scheme aim to provide further reassurance regarding personal assets. This will apply to finance already offered under the scheme, to ensure that all business owners receive the same level of government protection.
The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will ensure that more firms are able to benefit from government-backed support during this difficult time. It will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million. The aim is to give banks the confidence to lend to more businesses impacted by coronavirus but which they would not lend to without CLBILS. Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later this month.
Rishi Sunak said:
‘I am taking further action by extending our generous loan scheme so even more businesses can benefit.
‘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 £330 billion of government support, through loans and guarantees, reaches as many businesses in need as possible.’