Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders, the Chancellor of the Exchequer has announced this week.
Businesses will be able to borrow between £2,000 and £50,000 and access the cash within days. The loans will be interest free for the first 12 months, and businesses will be able to apply online.
The government has been consulting extensively with business representatives about the design of the new scheme, and will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days.
The government has said the loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days, providing immediate support to those that need it as easily as possible. They will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and agree a low standardised level of interest for the remaining period of the loan.
“Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.” the Chancellor of the Exchequer, Rishi Sunak, said.
The new Bounce Back Loans scheme will help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic, including the existing Coronavirus Business Interruption Loan Scheme (CBILS).
Applications are due to launch on Monday 4 May and firms will be able to access these loans through a network of accredited lenders.