Small businesses boosted by bounce back loans
Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders, the Chancellor announced yesterday (Monday 27 April).
Rishi Sunak said the new Bounce Back Loans scheme, which will provide loans of up to £50,000, would help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.
The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days, and comes alongside the £6 billion awarded in business grants, supporting 4 million jobs through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.
The government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.
The loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days- providing immediate support to those that need it as easily as possible.
The Chancellor of the Exchequer, Rishi Sunak, said: “Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.”
“This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses.”
Commenting, Chris Hobson, Director of Policy at East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire), said: “This is another welcome intervention from the Chancellor.”
“Although the Government has already made a significant amount of financial support available to businesses which need it, many have struggled to access it because of the sheer volume of applications being made, the delays in processing them and inconsistencies in the way different lenders are approaching the various loan schemes.”
“In the current situation, every day of delay is having a critical impact on businesses which need funding to ease their cashflow and wage pressures, so anything which can be done to quicken the flow of credit to the firms which need it most has to be a good thing.”
Firms will be able to access these loans through a network of accredited lenders. The government will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and agree a low standardised level of interest for the remaining period of the loan.
The scheme will launch for applications on Monday 4 May.
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