Sunak Tries to Resuscitate his Small Business Lending Ambitions with new Bounce Back Loan Scheme
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The UK Government has initiated a new loan scheme for businesses in response to evidence that measures already undertaken have largely failed to support businesses in a rapidly imploding economy.
Chancellor of the Exchequer Rishi Sunak told Parliament that small businesses will soon be able to apply for new Bounce Back Loans that will make available up to a maximum of £50,000, or 25% of turnover, with the government paying the interest for the first 12 months.
According to Sunak, the Treasury has been in close talks with the banks in recent days and these loans will be available from 9am next Monday.
"There will be no forward-looking tests of business viability; no complex eligibility criteria; just a simple, quick, standard form for businesses to fill in," says Sunak.
The Government's new loan scheme is designed to try and overcome the sclerotic pace of lending that has beset the Government's existing initiatives.
Sunak's opposite number in Parliament, Labour's shadow chancellor Anneliese Dodds, said CBILS, the scheme designed to underwrite loans for SMEs, is struggling to boost lending.
"As of last Thursday, 16,600 loans had been approved, and 9,000 provided- £2.8bn of lending to SMEs," said Dodds. "That is an eighth of the size of the comparable French scheme, which has lent to ten times as many companies."
Dodds also cited the case of Switzerland with a population of under 9 million that has approved four times as many loans within its first week than the UK has done in a month.
Sunak told Parliament on Monday that more than 1.5m new claims have been made to Universal Credit, highlighting the scale of the economic crisis facing the UK owing to the coronavirus lockdown.
The Chancellor also revealed Treasury data that shows over 4m jobs have now been furloughed while also citing survey evidence that showed a quarter of businesses have now stopped trading.
