Chancellor Rishi Sunak announced on Tuesday that the Treasury will give out £330billion – the equivalent of 15 percent of the UK’s GDP – in loans to protect firms facing losses as a result of the COVID-19 pandemic. The money will be available from next week and is aimed at helping companies pay salaries, rent and buy supplies.
How to apply for Coronavirus Business Interruption Loan Scheme
Speaking at a daily briefing on the COVID-19 outbreak, Mr Sunak said: “The coronavirus pandemic is a public health emergency. But it is also an economic emergency.
“We have never, in peacetime, faced an economic fight like this one.
“I know that people are deeply worried. I know that people’s anxiety about the disease itself is matched only by their anxiety about their livelihoods.
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Coronavirus UK: How to apply for Coronavirus Business Interruption Loan Scheme (Image: Getty)
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He added: “Any business who needs access to cash to pay their rent, the salaries, suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms.
“And if demand is greater than the initial £330billion I’m making available today, I will go further and provide as much capacity as required. I said whatever it takes – and I meant it.
“That support will be delivered through two main schemes: to support liquidity amongst larger firms, I have today agreed a new lending facility with the Governor of the Bank of England to provide low cost, easily accessible commercial paper.
“To support lending to small and medium-sized businesses, I am extending the new Business Interruption Loan Scheme I announced at the Budget last week, so that rather than loans of £1.2million, it will now provide loans of up to £5million, with no interest due for the first six months.”
Coronavirus UK: Rishi Sunak has made £330bn available to help out businesses during the coronavirus pandemic (Image: Getty)
The temporary Coronavirus Business Interruption Loan Scheme will be delivered by the British Business Bank (BBB), which is state-owned with the aim of increasing the supply of credit to small and medium enterprises as well as providing business advice services.
Companies can apply for the credit via the BBB with the Government underwriting them with a guarantee of 80 percent on each loan.
However, this is subject to a per-lender cap on claims.
Lenders won’t charge small business or banks for the guarantee, and the Government will waive the two percent it charges borrowers annually for the guarantee.
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Nic Redfern, finance director of KnowYourMoney.co.uk, said: “The Chancellor is clearly trying to live up to the government’s promise to do ‘whatever it takes’ to help businesses survive the coronavirus crisis.
“And these latest measures are certainly positive, but time is of the essence.
“The government must ensure that there are no delays in getting cash to businesses – promises of cash and support are one thing, but if it takes too long to come to fruition then many businesses will collapse.
“Ultimately, the government is acting and new measures are being introduced each day, which must be praised.
“An evolving strategy will clearly be important; the pandemic is a long-term issue, so it is vital that business leaders and employees receive ongoing support. What might seem reasonable now can quickly become insufficient.”
Coronavirus UK: Rishi Sunak said the UK has never faced an economic fight like this one (Image: Getty)
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The Chancellor rounded off his speech by saying: “The measures I have announced today are part of a comprehensive, coordinated and coherent response to what is a serious and evolving economic situation.
“These are only the first steps – I will set out the next stage of our response in the coming days.
“We have never faced an economic fight like this one.
“But we are well prepared. We will get through this. And we will do whatever it takes.”