Small businesses will be able to access loans of up to £50,000 underwritten by the taxpayer from next week, the chancellor announced on Monday 27th April as he admitted that some companies affected by coronavirus were struggling to get support. In an extension of the government’s existing loan scheme, Rishi Sunak said that small firms would be able to apply for a loan worth up to 25 per cent of their annual turnover, with the government paying the interest for the first 12 months.
The application process would be a “simple, quick standard form” and banks would perform only “customary” checks on applicants, Mr Sunak said. “For most firms loans will arrive within 24 hours of approval,” he told MPs.
It came as the Treasury revealed that 3.8 million people had been furloughed by their employers and were supported by the government at a cost of £4.5 billion. One in four firms are thought to have stopped trading.
“We should not ask the ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums to businesses that in some cases may have very little prospect of paying the loans back, and not necessarily because of the impact of the coronavirus,” he said.
Mr Sunak said that the so-called “bounceback” loans for small businesses would help the economy recover faster. “I know that some small businesses are still struggling to access credit,” Mr Sunak said. “If we want to benefit from their dynamism and entrepreneurial spirit as we recover our economy, they will need extra support to get through this crisis.” (Source: The Times 28/4)