Chancellor announces fully secured loans for small businesses
Small businesses must be eligible for new 100 percent government guaranteed Bounce Back loans.
Chancellor Rishi Sunak announced the latest addition to the Coronavirus Business Assistance Program in the House of Commons.
The program will start next week with loans offered to businesses of up to £ 50,000.
Mr Sunak said: “We have been in close talks with the banks in recent days and these loans will be available from 9 am next Monday.
“There will be no prospective tests of commercial viability; no complex eligibility criteria; just a simple, quick and standard form for companies to fill out.
“For most businesses, loans should arrive within 24 hours of approval.”
He continued: “And I have decided, for this specific device, that the government will support the loan by guaranteeing 100% of the loan.
“We shouldn’t be asking taxpayers to bear all the risk of lending almost unlimited sums to businesses that may have very little chance of repaying those loans – and not necessarily because of the coronavirus.
So I don’t think it’s fair to provide 100% guarantees on all of our programs.
“The new Bounce Back Loans carefully target this extraordinary level of government support to those who need it most.
“And the £ 50,000 cap balances the risk to the taxpayer with the need to support our smaller businesses.”
The move comes after criticism of slow access to existing loans, with banks being criticized for delays in granting loans.
The CBI and the Federation of Small Businesses have called for the introduction of the Small Business Program with full government support.
CBI chief executive Carolyn Fairbairn said businesses could be forced to disappear without further help.
And Mike Cherry, president of the Federation of Small Businesses, said: “The average value of a CBILS loan is over £ 170,000. The vast majority of small businesses – over 95% of which are micro- businesses or independent traders – don’t look for loans of this size. ”
The program requires a two-page online self-certification form with no principal or interest repayment due for one year.
In his statement to MPs on the economic climate, the Chancellor said: “We must have no doubts about the gravity of the situation.
“More than 1.5 million new applications have been filed with Universal Credit, more than 4 million jobs have been cut and survey data suggests that a quarter of companies have gone out of business.
“These are already tough times and there will be more to come.
“And while our interventions have saved millions of jobs and businesses, we cannot save all jobs and businesses.”
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