LONDON (CU)_Businesses affected by the COVID-19 pandemic will be entitled to receive government-backed loans of up to £10million under a new support scheme launched today.
Accordingly, restaurants, cafes, gyms and hairdressers which were forced to shut down on account of the pandemic will be able to access the funds. If businesses fail to pay back these loans, 80 per cent of what has been lent by the banks could be recovered from the Treasury.
The past COVID lending schemes, which included the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS) will be replaced by this new finance initiative on Tuesday (6 April).
Chancellor Rishi Sunak noted that as the United Kingdom has begun reopening parts of the country’s economy, this new “Recovery Loan Scheme” will ensure that businesses are provided with the finance they need to recover from the crisis.
“We have stopped at nothing to protect jobs and livelihoods throughout the pandemic and as the situation has evolved we have ensured that our support continues to meet businesses’ needs,” he said.
According to the Treasury, eligible businesses will be able to access loans varying between £25,001 and £10 million, while the scheme will also facilitate asset and invoice finance starting from £1,000. This new scheme will have the same government guarantee as the CBILS and CLBILS, but not the 100 per cent guarantee offered for the BBLS.
The scheme will run until 31 December, and could be used as an additional loan on top of the financial support received from previous emergency schemes. These recovery loans will be administered by the British Business Bank, with interest rates capped at 14.99 per cent.
Business Secretary Kwasi Kwarteng said the government is doing everything it can to support businesses as the economy reopens and people begin to recover their way of life.
“The launch of our new Recovery Loan Scheme will provide businesses with a firm foundation on which to plan ahead, protect jobs and prepare for a safe reopening as we build back better from the pandemic,” he said.
