The business interruption loan scheme will be "bolstered so more small businesses can benefit", chancellor Rishi Sunak has announced, alongside a "new scheme for larger companies"
The move will see the chancellor extend the Coronavirus Business Interruption Loans Scheme (CBILS) that was launched last week to "all viable small businesses affected by Covid-19", allowing them to be eligible to access finance to keep operating during the crisis.
The chancellor has also confirmed a new government-backed Coronavirus Large Business Interruption Loan Scheme (CLBILS), operated by the Bank of England, which will be available to larger companies, allowing more businesses to benefit from government-backed support.
The Treasury has said it will provide a "government guarantee of 80%" to enable banks to make loans of up to £25m to firms with an annual turnover of between £45m and £500m.
In a statement the chancellor said: "We have also listened to the concerns of some larger businesses affected by Covid-19 and are announcing new support so they can benefit too. This will give banks the confidence to lend to more businesses that are impacted by coronavirus, but which they would not lend to without CLBILS. Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest, and further details of the scheme will be announced later this month."
The chancellor is set to speak to bank chief executives next week to discuss how the loan schemes are working and to ensure "everybody is playing their part". He said that banks must "move quickly" and that lenders are now banned from requesting personal guarantees on loans under £250,000. The government will continue to cover the first 12 months of interest and fees.
Business secretary Alok Sharma said: "The changes we are making to the CBILS will make it easier for business to access the lending we have put in place, helping them to continue trading and protect the livelihoods of their staff."
According to the latest figures from UK Finance, £90m in government-backed loans have been approved for nearly 1,000 small and medium-sized businesses from 130,000 enquiries across the country. Yet many in the hospitality industry have voiced concerns about the difficulties in accessing the loans, including the complex application process, lenders trying to upsell more expensive products and having to put up personal guarantees.