In the year since the Chancellor, Rishi Sunak, delivered his first Budget to a packed Commons chamber in March 2020, more than 135,000 people in the UK have died from Coronavirus, there have been three national lockdowns, the economy has shrunk by 9.9 per cent and Coronavirus support measures have cost around £280 billion.
According to reports in the Financial Times, the Government is considering launching a new loan scheme, where businesses could borrow anything up to £10 million through an 80 per cent state-guaranteed bank loan.
The new scheme, which could be a successor to the existing Coronavirus Business Interruption Loan Scheme (CBILS), would provide a permanent state-backed small business loan to eligible companies.
Under the plans, the Government would guarantee loans to small businesses ranging from a few thousand pounds up to £10 million over a six-year lending period.
This would effectively extend the CBILS, but with a lower threshold once applications for the existing loan scheme ends on 31 March this year.
The Financial Times reports that participating banks could set their own interest rate for their loans, capped at around 15 per cent. Research by GrowthBusiness found that lenders are charging anything between three per cent and 15 per cent for current CBILS loans.
As yet, no official announcement has been made on such a scheme, but it is understood that the Chancellor is looking to announce a range of options to support jobs and businesses in his upcoming Budget on 3 March 2021.
Douglas Grant, Director of CBILS lender Conister, said: “We fully support the UK Government’s plans to launch a permanent replacement for the £65 billion Covid loans programme to support SMEs.
“This more permanent financial support from the Government will be welcome news to those resilient SMEs that have already shown extraordinary levels of adaptability and strength in the face of changing consumer behaviour.”