UK Chancellor of the Exchequer Rishi Sunak on Friday took further action to support firms affected by the coronavirus crisis by bolstering business interruption loans for small businesses and announcing a new scheme for larger companies.
The Indian-origin finance minister revealed that more than 90 million pounds of loans to nearly 1,000 small and medium sized firms 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 1.9 billion pounds of support to firms and a further 1.6 billion pounds has been committed.
"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 that 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 pounds of government support, through loans and guarantees reaches as many businesses in need as possible," he said.
To maximise the support available, Sunak said the CBILS will be extended 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 said it is also stopping lenders from requesting personal guarantees for loans under 250,000 pounds and making operational changes to speed up lending approvals, with the first 12 months of interest and fees covered by the state.
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The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will ensure that more firms are able to benefit from the government-backed support during this difficult time.
It will provide a government guarantee of 80 per cent to enable banks to make loans of up to 25 million pounds to firms with an annual turnover of between 45 million and 500 million pounds.
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 UK's Treasury department said.
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.
"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," Sunak said.
He is set to speak to bank chief executives next week to discuss how the schemes are working and ensure everybody is playing their part.
There have been over 130,000 enquiries from businesses across the country for business interruption loans, according to the latest figures from UK Finance.
Some 983 businesses have had finance approved, while banks are processing thousands of loan applications and scheme changes made today will help them approve loans for the smallest businesses as quickly as possible.
UK business secretary Alok Sharma said: "The coronavirus pandemic represents a challenge to businesses unlike any other they have faced before and we are determined to support them through this difficult time.
"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".
Last week, Sunak and the Governor of the Bank of England, Andrew Bailey, wrote to banks asking them to support small and medium-sized enterprises in any way they can.
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.
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