Chancellor Rishi Sunak has announced that small businesses are to get access to 100% taxpayer backed loans of up to £50,000 from next week. The introduction of the scheme comes after many small businesses were concerned about having slow access to existing coronavirus rescue schemes.
The scheme aims to unlock the bottleneck of credit checks by banks, which could have resulted in many small firms going under before securing loans.
Small businesses just need to fill in a two-page form online and the loan could be in their accounts within days of applying.
The terms of the loan mean that no capital or interest repayments will be due for 12 months. The government will pay the interest during this time instead.
Firms asking for the new loans will now only have to prove that they were sustainable before the coronavirus crisis, not that they will be viable once the crisis comes to an end.
Rishi Sunak added:
“I've heard some calls for the government to underwrite all our loan schemes with 100% guarantees. I remain unconvinced by the case for doing that universally.
“We should not ask the ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums to businesses who may, in some cases, have very little prospect of paying those loans back and not necessarily because of the impact of the coronavirus.”