Small businesses will get access to new loans worth up to £50,000 backed by a 100 per cent government guarantee, it was announced today.
Chancellor Rishi Sunak unveiled the provision in the latest escalation of the massive bailouts for firms hit by the coronavirus lockdown.
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.
Chancellor Rishi Sunak unveiled the provision in the latest escalation of the massive bailouts for firms hit by the coronavirus lockdown
Small businesses have been left struggling to cope as the government effectively put the economy on pause to stop the spread of coronavirus (pictured, Winchester High Street)
He said four million staff now been furloughed, admitting that government cannot help everyone.
‘These are already tough times and there will be more to come,’ he said.
‘If we want to benefit from their dynamism and entrepreneurial spirit as we recover our economy, they will need extra support to get through this crisis,’ Mr Sunak said.
‘Some businesses will not want to take on more debt, which is why our focus has been on cash grants, tax cuts and tax deferrals – but for others loans will be part of the answer.
‘So, today, we’re announcing a new micro loans 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.’
There have been mounting tensions in Cabinet over how and when to ease the lockdown.
Mr Sunak is regarded as more hawkish on the need to loosen the restrictions, amid concerns over the massive economic damage.
But he said this afternoon that the ‘most important thing’ currently is to ‘protect the health of our people’.
‘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.’
Earlier, Boris Johnson signalled an ‘exit strategy’ from coronavirus lockdown will be fleshed out within days as he took back the reins of power.
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.
But Mr Johnson channeled Churchill’s famous speech about the ‘end of the beginning’ by saying there are ‘real signs’ the UK is making ‘progress’.
Earlier today, Boris Johnson signalled an ‘exit strategy’ from coronavirus lockdown will be fleshed out within days as he took back the reins of power
In a bid to quell rising Tory alarm about the impact on the economy, he said once the disease was under control the draconian curbs can be ‘refined’, and the government would say more in the ‘coming days’ about how that might happen. He urged Opposition parties to work with him, pledging to be ‘transparent’ about decisions.
With his trademark blond mane looking longer and more unkempt than usual, Mr Johnson said: ‘We are now beginning to turn the tide…
‘I ask you to contain your impatience because I believe now we are coming to the end of the first phase of this conflict.’
Ministers welcomed the prospect of an exit plan, with Paymaster General Penny Mordaunt and International Development Secretary Anne-Marie Trevelyan saying they had been getting huge volumes of mail from ‘business owners who are desperate to get back to work’.
There are signs that Britons are starting to vote with their feet, with traffic levels rising, and more shops and constructions sites stepping up activity.
But Downing Street cautioned that ‘refinements’ to the lockdown might not be across the board.
‘There could be easing in some areas, there could also be a toughening in other areas,’ the PM’s spokesman said.
‘We will not be returning immediately to life as we knew it.’