Chancellor announces 'bounce back' loans of up to £50,000 for small firms
27 April 2020, 16:18 | Updated: 27 April 2020, 18:13
Chancellor Rishi Sunak has announced a new micro-loan scheme making up to £50,000 available for small businesses to help them through the coronavirus crisis.
The Bounce Back Loans will be supported by a 100 per cent guarantee and all interest on the loan will be paid by the government for the first 12 months, as the country continues to battle coronavirus.
After speaking with banks, the chancellor confirmed they will become available from 9am next Monday and will provide "a simple, quick, easy solution for those in need of smaller loans."
Companies will be able to apply for either £50,000 or 25 per cent of their turnover.
Mr Sunak told MPs in the Commons: "There will be no forward-looking test of business viability, no complex eligibility criteria, just a simple, quick, standard form for businesses to fill in.
"For most firms, loans should arrive within 24 hours of approval and I've decided for this specific scheme that the Government will support lending by guaranteeing to the lender 100% of the loan."
1/ Today, we're announcing a new loan scheme. A simple, quick, easy solution for those in need of smaller loans.— Rishi Sunak #StayHomeSaveLives (@RishiSunak) April 27, 2020
Businesses can apply for new Bounce Back Loans up to a maximum of £50,000, or 25% of turnover, with the government paying the interest for the first 12 months. pic.twitter.com/aBYcUkR9sR
However, the chancellor added the government would not be able to underwrite 100 per cent of the loan schemes on offer as it needs to balance the risk to the taxpayer with the needs of small businesses.
He said: "I've heard some calls for the government to underwrite all our loan schemes with 100% guarantees. I remain unconvinced by the case for doing that universally.
"We should not ask the ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums to businesses who may, in some cases, have very little prospect of paying those loans back and not necessarily because of the impact of the coronavirus.
"So, I do not think it is appropriate to provide 100% guarantees on all of our schemes.
"Instead, these new bounceback loans carefully target that extraordinary level of state support at those who need it most.
"The £50,000 cap balances the risk to the taxpayer with the need to support our smallest businesses."
He announced that the initial £5 billion coronavirus emergency response fund has now more than trebled, "with the NHS and public services receiving £16 billion so far."
Mr Sunak also said more than 1.5 million new claims have been made for Universal Credit, while more than four million jobs have now been furloughed.