Chancellor announces 100% guarantee on small business loans

Chancellor Rishi Sunak has announced the launch of a new ‘bounce back’ emergency loan scheme for small businesses, which will offer 100% guarantees on emergency loans. Today (27 April) Sunak told the House of Commons that the scheme would begin next week, offering SMEs loans of up to £50,000. The government will pay interest on the loans, that are worth 25% of the businesses’ turnover, in the first 12 months. He said: “Around half a million employers have already applied for help to pay the wages of over four million furloughed jobs. I know that some small businesses are still struggling to access credit. “They are in many ways the most exposed businesses to the impact of the coronavirus and often find it harder to access credit in the first place.” It comes after he last week stated that there would be no change to the 80% government guarantee for the Coronavirus Business Interruption Loan Scheme (CBILS). Rather than modify the existing CBILS, the chancellor has now introduced the new measure in an effort to offer further support to SMEs amid the ongoing pandemic. Before the announcement of the scheme, there was allegedly debate amongst Treasury members whether the maximum size of the new loan should be £25,000 or £50,000. Greg Taylor, a partner at MHA MacIntyre Hudson, argued that SMEs are in need of grants rather than loans, however. He said: “The chancellors’ new plan is unlikely to help SMEs. The kind of micro-businesses being targeted need grants, not to be saddled with more debt that they can’t afford, and that will potentially stagnate their growth. “In addition, if the criteria for the loans is the same as for the current Coronavirus Business Interruption Loan Scheme (CBILS), then many micro-businesses still won’t qualify for funding.” He added: “Relaxing some of the lending terms for government-backed loans to smaller businesses would be a better option than a 100% government backed guarantee. This should be coupled with a more uniform set of criteria, so SMEs aren’t faced with such a lottery on how “their bank” interprets the rules compared to a competitor bank.” He further argued that loans should be repayable over 10 years, rather than a maximum six, in order to give UK SMEs a “better chance of recovering at their own pace” and repaying their loans.

Chancellor announces 100% guarantee on small business loans

Read Next

Footfall declines 1.1% in October

Cold weather chills consumer spending in June

De Beers fourth cycle diamond sales drops to $380m

General election called for 4 July

Queensmith acquires ingleandrhode.co.uk from administrators

Footfall declines 1.1% in October

Cold weather chills consumer spending in June

De Beers fourth cycle diamond sales drops to $380m

General election called for 4 July

Queensmith acquires ingleandrhode.co.uk from administrators

Warm weather fails to boost footfall in May

Goldsmiths Centre to host 2D hand-rendering talk

My Jewellery partners with Freshstream to support international growth

Jewells to open seven new stores across UK

De Beers CEO to attend Angola Ministerial Round Table

Astor tiara sells for £889,400 at Bonhams London Jewels auction

Read Next

Footfall declines 1.1% in October

Cold weather chills consumer spending in June

De Beers fourth cycle diamond sales drops to $380m

General election called for 4 July

Queensmith acquires ingleandrhode.co.uk from administrators

Related Articles

Warm weather fails to boost footfall in May

Goldsmiths Centre to host 2D hand-rendering talk

My Jewellery partners with Freshstream to support international growth

Jewells to open seven new stores across UK

De Beers CEO to attend Angola Ministerial Round Table

Astor tiara sells for £889,400 at Bonhams London Jewels auction