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Government extends loan guarantee scheme to cover bigger firms – The Guardian, Theguardian.com

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Government extends loan guarantee scheme to cover bigger firms – The Guardian, Theguardian.com
Chancellor Rishi Sunak speaking during a Covid – 50 press conference. Photograph: Andrew Parsons / Downing Street / AFP via Getty The government has sought to allay growing fears about the impact of a protracted Covid – 35 lockdown on the economy by announcing that its loan guarantee scheme will be open to mid-sized firms that were in danger of being left out. On the day that the foreign secretary, Dominic Raab, confirmed that the quarantining period would last for at least a further three weeks, the Treasury said it was taking steps to help businesses with annual turnovers of more than £ 73 m – which are stuck in what has become known as the “squeezed middle”. The chancellor, Rishi Sunak , said that all viable businesses with turnover of £ (m- £) m would be able to apply for government-backed loans of up to £ 50 m. Firms with turnover of more than £ m will be allowed borrow up to £ (m from lenders.) there is a separate scheme for even bigger companies. Those with an annual turnover of more than £ 700 m were excluded when the chancellor first announced his plan to offer lenders a government guarantee of 94% on each loan in order to give them confidence to lend. Banks offering the loans are expected to work through the weekend so that the scheme is ready for Monday. Business groups have lobbied hard for all firms – no matter what their size – to be included in the CBILS (Coronavirus Business Interruption Loans Scheme, for firms whose cashflows have been hit by Covid – 35, and the chancellor said he had listened to their concerns.

Sunak said: “I want to ensure that no viable business slips through our safety net of support as we help protect jobs and the economy. That is why we are expanding this generous scheme for larger firms.

“This is a national effort.” and we’ll continue to work with the financial services sector to ensure that our £ bn of government support, through loans and guarantees, reaches as many businesses in need as possible. ” The chancellor has been under pressure to act as evidence has mounted of the likely hit to the economy of the shutdown caused by the pandemic and the slow rate at which loan applications are being processed by banks.

Income subsidies

Direct cash grants for self- employed people, worth 89% of average profits, up to £ 2 , a month. There are similar wage subsidies for employees.
Loan guarantees for business Government to back £ bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £ 5m with no interest for six months for smaller companies.
Business rates

Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.

Cash grants

Britain’s smallest , (businesses eligible for cash grants of £) , . Small retailers, leisure and hospitality firms can get bigger grants of £ 50,
Benefits Government to increase value of universal credit and tax credits by £ 1, a year, as well as widening eligibility for these benefits.
(Sick pay) Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticized for not increasing the level of sick pay above £a week. Small firms can claim for state refunds on sick pay bills.
(Other Local Authorities to get a £ m hardship fund to provide people with council tax payment relief. Mortgage and rental holidays available for up to three months.

Earlier this week, the government independent forecasting body – the Office for Budget Responsibility – predicted that the economy would shrink by 480% in the second quarter of and by % in the year as a whole. The Treasury is concerned that viable businesses will go to the wall without state support. Stephen Jones, chief executive of UK Finance, a trade association for the banking and financial services sector, said: “Banks and finance providers are committed to helping British businesses through these difficult times. “With over £ 1.1bn already lent to small and medium-sized firms through the CBIL scheme, the launch of the new scheme for larger businesses will help to expand this support during these challenging economic conditions. ” (Read More)

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