Small businesses will be able to secure a loan worth up to £50,000 with the Government guaranteeing 100 per cent of the risk in the latest emergency scheme aimed at helping firms survive the coronavirus crisis.
Chancellor Rishi Sunak said the “bounce back loans” would have the interest paid by the Government for the first 12 months.
100 per cent guarantee
Mr Sunak acknowledged that some small firms were struggling to access credit, and by guaranteeing the full value of the loan he hopes that lenders will allow companies to borrow the funds they need.
But he rejected calls for the Government to underwrite other coronavirus loan schemes with a 100 per cent guarantee, insisting his new plan would “carefully target” the level of state support at those who need it most.
He told MPs: “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.
“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.”
The new “microloan scheme” would provide a “simple, quick, easy” solution, he said.
Mr Sunak added: “Businesses will be able to apply for these new bounce back loans for 25 per cent of their turnover up to a maximum of £50,000 with the Government paying the interest for the first 12 months.”
The loans will be available from 9am next Monday, with “no forward-looking test of business viability, no complex eligibility criteria, just a simple, quick standard form for businesses to fill in”.