Chancellor relaxes rules around coronavirus loan scheme
Chancellor Rishi Sunak has relaxed the rules for SMEs applying for the Coronavirus Business Interruption Loan Scheme (CBILS) after days of sustained complaints that the banks are being too strict with applicants.
Sunak 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 during this difficult time.
The Government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. It will continue to cover the first twelve months of interest and fees.
Sunak said he will be speaking to the chief executives of the banks next week to “ensure everybody is playing their part”.
He added: “We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country.
“And now 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.”
The Government saud more than £90m of loans to nearly 1,000 SMEs have been approved under the government’s Coronavirus Business Interruption Loan Scheme (CBILS) since its launch last week. And a government-backed scheme to provide financing to larger companies, being operated by the Bank of England, has also provided almost £1.9bn of support to firms and a further £1.6bn has been committed.
Scott Knowles, chief executive of East Midlands Chamber, said: “The ongoing COVID-19 situation continues to unfold at a rapid pace, so it’s good to see the Chancellor keeping a close eye on developments and responding accordingly with further interventions.
“Improvements to the Coronavirus Business Interruption Loan scheme will help firms access cash more quickly, while the announcement of a new loan scheme for mid-sized companies will help close a significant gap in existing support.
“However, the measures announced by Government to date will make a difference only if businesses on the ground can access this support quickly and easily, and lenders play their part in making these funds more readily available to the businesses that need them.
“Hopefully, this enhanced support will have the desired effect in making it easier for businesses to access the funding they need to ease their cash flow, continue trading and preserve jobs in the longer term.”