Chancellor Rishi Sunak has announced an extra financial package for small businesses affected by the coronavirus lockdown.
Chris Hargreaves explains more…
Millions of businesses have been affected by the lack of income due to social distancing and employees either being furloughed or working from home.
The chauffeur industry, along with the wider passenger transport sector relies heavily on airports, restaurants, and the hospitality industry operating, but since the government lock-down the country the chauffeur industry has been hit hard.
With major sporting events cancelled the hospitality sector has also seen revenues dry up and when even in the rare case a major sporting event takes place such as Formula One the race will be played out behind closed doors.
It hasn’t helped that banks have either been slow to provide government-backed coronavirus emergency loans or turned down applicants.
The government has also been criticised for not backing current loans by 100 per cent to keep businesses afloat.
However, today small businesses will get access to new loans worth up to £50,000 backed by a 100 per cent government guarantee.
After complaints of delays and problems in getting cash from banks, Mr Sunak said the ‘bounceback’ loans for small companies will have a ‘very simple’ application process, and the government will cover interest payments for 12 months.
The maximum amount will be a quarter of annual turnover, with a ceiling of £50,000.
But he told the Commons he was not convinced by calls for all coronavirus loans to be supported by a 100 per cent government guarantee – despite complaints that they are struggling to obtain money from banks.
Speaking in the Commons, Mr Sunak said he recognised the pain being suffered by workers and companies.
So, today, we’re announcing a new microloans scheme providing a simple, quick, easy solution for those in need of smaller loans.
‘Businesses will be able to apply for these new bounceback loans for 25% of their turnover, up to a maximum of £50,000, with the Government paying the interest for the first 12 months.’
‘While our interventions have saved millions of jobs and businesses, we can’t save every job and every business,’ he said.
‘I understand and I share people’s anxiety. But right now the most important thing we can do to protect our economy is to protect the health of our people.
‘As my right honourable friend the Prime Minister said this morning, we are making progress, we are beginning to turn the tide.
‘But if we lose control of the virus again, we risk seeing a second spike, which we all want to avoid.’
In a statement in Downing Street, the PM assured the country he is back in charge after weeks recuperating from a serious scare with the killer disease and urged people to be ‘patient’ as it was not yet the time to ‘go easy’ on social distancing rules.
Unlike the current 80 per cent backed loans which can take weeks, the new 100 per cent backed loans will be available for businesses 24 hours after applying.
For businesses with financial worries or questions, see this article for help and support from Ethos Finance.
