Money

Business reacts to Chancellor's new Covid-19 support



Scottish Chambers of Commerce has warned the Chancellor his rejigged business loans package must get cash to firms fast or see them disappear.

Rishi Sunak unveiled his new plan last night after criticism that the original one left many businesses out and put obstacles in the way of loan funding.

The Treasury confirmed:

  • A new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will provide a Government guarantee of 80% for loans of up to £25 million for firms with an annual turnover of £45-500 million
  • A ban on banks demanding personal guarantees on loans of less than £250,000 to speed up the process of lending and reduce financial risk for applicants
  • “Viable” small businesses affected by Covid-19 no longer have to hunt for commercial financing before they apply for the Coronavirus Business Interruption Loan Scheme (CBILS)

More than £90 million has been paid to 983 small and medium sized businesses under CBILS, with £1.9 billion now in the accounts of larger firms, the Treasury said. A further £1.6 billion has been committed.

Sunak will meet with chief executives of UK banks to discuss the implementation of this adjusted schemes next week.

Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce said: “This is a much needed boost to the financial package available to Scottish businesses. We asked the Chancellor for a rethink to the Coronavirus Business Interruption Loan Scheme (CBILS) and he has listened.

“There were gaps, particularly for small and medium-sized companies in the original package. Our message remains the same: Get the cash out the door fast – businesses cannot afford to wait if we are to survive. This is about saving jobs and the livelihoods of millions of employees across all sectors throughout Scotland.”

Business Secretary Alok Sharma had warned banks it would be “completely unacceptable” if they were found to be “unfairly refusing funds to good business in financial difficulty”, especially following the taxpayer-funded 2008 bailouts after the financial crash.

Those taking part in CLBILS will see 80% of their loan guaranteed by the Government but, unlike the scheme for small to medium sized businesses, they will not get a 12-month holiday on paying the interest and fees involved.

For small business loans of more than £250,000, personal guarantees will be limited to just 20% of any amount outstanding on the lending after any other recoveries from business assets, with lenders continuing to be prohibited from asking business owners to put their house on the line.

CBI director general Dame Carolyn Fairbairn said: “The Chancellor’s measures are a big step forward. They will help deliver cash faster to firms battling for survival in the headwinds of the pandemic.”

Mike Cherry, the FSB’s national chair said: “Removing personal guarantees for all commercial loans below £250K is very welcome. Taking on debt at the current time is a daunting prospect for many small businesses and the self-employed.”

Labour shadow chancellor John McDonnell said: “I welcome this move but the Chancellor cannot keep being behind the curve in supporting our economy.

“There remain huge gaps in support for employees and self-employed that must be addressed immediately if people are to avoid facing serious hardship in this crisis.”

Work on delivering support for charities is ongoing, the Treasury confirmed, while the Department for Transport is understood to be in talks with airlines about bespoke help.



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