The Chancellor has announced that the Coronavirus Business Interruption Loan Scheme (CBILS) will be extended to small businesses and is introducing a new loan scheme for businesses with revenue up to £500million.
In addition to this, the Treasury has also announced it was going to ban lenders from requesting personal guarantees for loans under £250,000 and it was looking to make operational changes to speed up the lending approvals, after receiving much criticism of how the scheme has been administered to date.
Under the CBILS, businesses with a turnover up to £45m can apply for a loan of up to £5m.
The scheme is run by high street banks such as RBS, HSBC, Lloyds and Barclays, with the government promising to cover 80 per cent of the loans they write.
The government is also covering the first 12 months of interest and fees.
The scheme has created much debate with criticism that some banks have declined applications on the basis they were not eligible and asked them to sign up to regular loan products instead and also that some banks have been charging high rates of interest and seeking personal guarantees from directors.
A further critical concern was that there are fears the money would not reach businesses fast enough, leading to many businesses simply not being able to survive any longer.
The announcement that the Treasury is planning a new loan scheme for businesses with revenue between £45m and £500m is also welcomed news, following concerns that medium-sized businesses were missing out, as they were too large to apply for the loan scheme and too small to take advantage of a government debt-buying programme for larger companies.
The new coronavirus large business interruption loan scheme will provide a government guarantee of 80 per cent to enable banks to make loans of up to £25m to businesses with an annual turnover of between £45m and £500m.
This announcement is encouraging news for many businesses with these important changes now helping to ensure that businesses can access the help they need.