Chancellor takes further action to support SMEs

Rishi Sunak with the CBI
Rishi Sunak with the CBI

The chancellor Rishi Sunak is taking further action to support companies affected by the coronavirus crisis by bolstering business interruption loans for small businesses

>

He has also announced a new scheme for larger companies.

More than £90 million of loans to nearly 1,000 SMEs have been approved under the government’s Coronavirus Business Interruption Loan Scheme (CBILS) since its launch last week.

And a government-backed scheme to provide financing to larger companies, being operated by the Bank of England, has also provided almost £1.9 billion of support to firms and a further £1.6 billion has been committed.

To maximise the support available, the chancellor is extending the CBILS so that all viable small businesses affected by Covid-19, and not just those unable to secure regular commercial financing, will now be eligible should they need finance to keep operating during this difficult time.

The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. The government will continue to cover the first 12 months of interest and fees.

The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will ensure that more firms are able to benefit from government-backed support during this difficult time.

It will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million.

This will give banks the confidence to lend to more businesses which 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.

Stephen Phipson, CEO of Make UK, added: "Manufacturers will welcome today's announcement by the chancellor. Since the initial proposals were put forward companies have expressed concern about the availability of finance and the degree of security being demanded by lenders and the Treasury has listened to this feedback and taken swift action. It's also clear that many companies were sitting in the squeezed middle between the loan scheme and Bank of England's Corporate Finance Facility and today's announcement will provide these companies with further reassurance

"However, clarification is still needed on the treatment of UK based SMEs which are subsidiaries of larger groups. We are hearing of many companies being denied CBILS loans because of this which has to stop.

"Manufacturers across the UK have been struggling to access urgently needed support – we hope that this announcement means that the tap is now turned on."

Carolyn Fairbairn, CBI director-general, commented: “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.

“By providing more support for mid-tier companies, they are backing our most significant and iconic regional employers. These firms number in the thousands and make a huge contribution to the economy, so it’s good to see them getting the support they deserve. More detail and a clear time frame are still needed, but this plan is hugely welcome.

“Reforms to the CIBL scheme for firms up to £45 million will simplify the process and make it easier for loans to reach smaller businesses struggling for cash. Alongside, banks are working at breakneck speed to deliver loans to firms most in need.

“Each week brings unprecedented levels of economic support and it’s encouraging to see the government stepping in where urgent help is needed. This will need to continue as the challenges of this health and economic crisis unfold.”

CBI www.cbi.org.uk

Company

CBI

Tags
Related Articles
Most recent Articles

Renishaw highlights career pathways in engineering

There is not one singular blueprint that can lead to a career in the engineering industry. It offers a variety of roles, open to people from diverse backgrounds. To highlight the diversity of skills and experiences in engineering, global engineering technologies company, Renishaw, has created the ‘Employee perspectives’ series.
19 hours ago News

Login / Sign up