Small firms are to get access to 100% taxpayer-backed loans after they raised concerns about slow access to existing coronavirus rescue schemes.
Chancellor Rishi Sunak told the House of Commons the scheme would start next week, offering firms loans up to £50,000 within days of applying.
It aims to unlock a backlog of credit checks by banks amid fears many small firms could fold before getting loans.
The scheme requires filling in a two-page self-certification form online.
The loan terms mean that no capital or interest repayments will be due for one year. Instead, the government will pay the interest for the first 12 months.
Banks have come under fire for delays in handing out loans, but have blamed the heavy workload, need to complete the necessary credit checks, and a shortage of staff.
Underwriting the loans removes the risk that banks will not get their money back, which Mr Sunak hopes will speed up the application process. The new “microloan scheme” would provide a “simple, quick, easy” solution, he told the Commons.
In a statement issued on behalf of the major lenders to small firms, including Barclays and Lloyds, trade body UK Finance said the “welcome changes should enable banks to provide finance to businesses more quickly”.
I actually think this could work very well for many of our optical and audio clients and it appears this new scheme will be far easier to apply for.
What are your thoughts?
