Coronavirus: Rishi Sunak revamps business loan scheme amid claims banks were holding back funds
Rishi Sunak was forced to act following criticism of the original scheme.
Rishi Sunak has been forced to revamp a scheme to provide emergency loans to help keep businesses afloat during the coronavirus outbreak.
The Chancellor had to step in amid claims that companies were facing high interest rates, while bosses were having to put up their homes as security in exchange for the cash.
Fewer than 1,000 loans have so far been approved by banks under the Coronavirus Business Interruption Loan Scheme, despite the Treasury receiving more than 130,000 queries from worried firms.
Mr Sunak said the changes would mean that more small businesses could apply for help, not just those which have been turned down for commenrical loans.
And a separate scheme is also being set up to provide emergency cash for larger firms impacted by Covid-19.
It means the Government will underwrite 80% of loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million.
Banks will also be banned from asking for personal guarantees from company directors before approving a loan.
The Chancellor said: "We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country.
"And now I am taking further action by extending our generous loan scheme so even more businesses can benefit. We have also listened to the concerns of some larger businesses affected by COVID-19 and are announcing new support so they can benefit too.
“This is a national effort and we’ll continue to work with the financial services sector to ensure that the £330 billion of government support, through loans and guarantees, reaches as many businesses in need as possible."
Adam Marshall, director-general of the British Chambers of Commerce, said: "We’re pleased that the Chancellor is listening and responding to the real-world concerns posed by firms across the UK who are urgently trying to access financial support."
But Shadow Chancellor John McDonnell said: "I welcome this move but the Chancellor cannot keep being behind the curve in supporting our economy.
"There remain huge gaps in support for employees and self-employed that must be addressed immediately if people are to avoid facing serious hardship in this crisis."