UK launches loans for virus-hit small businesses
LONDON, United Kingdom – British finance minister Rishi Sunak on Monday, April 27, launched state-backed micro-loans of up to £50,000 ($62,000, 57,000 euros) for small businesses hit by coronavirus fallout.
Sunak, unveiling his latest emergency COVID-19 scheme before parliament, said the "bounce back" loans would have the interest paid by government for the first year.
The new plan is the latest in a series of multibillion-pound packages to help those affected by the deadly disease in Britain.
"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," Sunak told lawmakers.
"So today we are announcing a new micro-loan scheme, providing a simple quick easy solution for those in need of smaller loans.
"Businesses will be able to apply for these new 'bounce back' loans to 25% of their turnover, up to a maximum of £50,000."
The loans will be available from lenders from next Monday, May 4, while businesses will only have to fill in a simple standard form with no complex eligibility criteria.
Sunak vowed that funds will then arrive within 24 hours of approval.
"I know that some small businesses are still struggling to access credit," he added.
"They are in many ways the most exposed businesses to the impact of the coronavirus and often find it harder to access credit in the first place.
"If we want to benefit from the dynamism and entrepreneurial spirit as we recover our economy, they will need extra support to get through this crisis."
Late last week, Bank of England policymaker Gertjan Vlieghe had warned that the coronavirus now threatens potentially the worst recession in several centuries in Britain.
Britain's Office for Budget Responsibility (OBR) fiscal watchdog has warned that the coronavirus could shrink the economy by 13% in 2020.
"We should be in no doubt about the seriousness of the economic situation," added Sunak, noting the OBR has warned the coronavirus will have "very significant impacts" both at home and in the global economy.
So far, more than 4 million jobs have been furloughed with 80% of wages paid by government under emergency support measures, while there have been more than one and a half million new claims for Universal Credit welfare support, according to Sunak.
"These are already tough times and there will be more to come," he said, adding survey evidence suggested more than a quarter of UK businesses had stopped trading.
"And while our interventions have saved millions of jobs and businesses, we cannot save every job and every business." – Rappler.com