The government has pledged to do “whatever it takes” to support a greater number of British businesses and individuals as the coronavirus outbreak causes major economic disruption.
In an announcement Chancellor Rishi Sunak said government would “stand behind businesses small and large”, pledging government-backed and guaranteed loans “to get through this” as he announced the new support with a raft of new emergency measures.
- A package of £330bn of loan guarantees to businesses, with more to be made available if needed
- Interest-free business interruption loans will be increased to £5m, up from £1.2m announced at last week’s budget. No interest will be due for the first six months
- A 12-month business rates holiday for all shops, pubs, theatres, music venues, restaurants and any other hospitality or leisure business
- A cash grant of up to £25,000 for those businesses with a rateable value of less than £51,000
- A three-month mortgage holiday for those in difficulty because of coronavirus
- Cash grants of £10,000 to 700,000 of the smallest businesses
- Local authorities will be fully compensated for the cost of these measures, with at least £3.5bn going to devolved administrations in Scotland, Wales and Northern Ireland
- A potential support package for airlines and airports in the face of worldwide travel bans
Federation of Small Businesses (FSB) National Chairman Mike Cherry said “The Government has thankfully today made clear that it will step in and provide small firms with the cash flow they need – whatever it takes. This marks a hugely important intervention. And it’s good to hear the Chancellor pledging to do more in the days ahead. Small firms are having their futures threatened in the here and now. They need support in the here and now.”
“This unprecedented package of loan guarantees, business rates breaks and cash grants marks a hugely welcome step forward. The key now is to deliver these measures within the coming days with no hold ups at banks, local authorities or central government.
“Some small businesses are already on the brink – they need time and space from landlords, HMRC and lenders over the next few days before these interventions take effect.”
“Clearly small employers will need a huge amount of support to keep staff on their books at this hugely difficult time, so it was good to hear the Chancellor pledging to develop an Employment Support Package to help make that possible. We will be working together with the Government to ensure the employment package provides for the self-employed.”
“In what will be difficult days ahead for the small firms that make-up 99 per cent of our business community, the Chancellor has today made it clear that the Government will back them – we will continue to press for any and all measures needed. Support must be delivered in every nation and region of the UK.”
Stephen Jones, UK Finance CEO, said “Mortgage lenders will support customers who are experiencing issues with their finances as a result of COVID-19 and the options include a payment holiday of up to three months.”
“Monthly mortgage payments tend to be the largest outgoing for the vast majority of households and lenders are keen to reassure homeowners that the industry is working hard to put measures in place to support them during these uncertain times.
“Customers who are concerned about their current financial situation should get in touch with their lender at the earliest possible opportunity to discuss if this is a suitable option for them.”
Duncan Swift, President of insolvency and restructuring trade body R3 said “The Chancellor’s ‘Whatever It Takes’ strategy is the right one, but businesses do need help now, and other types of help are needed alongside the additional access to finance announced today.”
“Feedback from our membership is that otherwise healthy businesses are already experiencing a cash flow crisis. Many businesses will face insolvency without significant creditor forbearance or direct help from Government to bridge the gap in their finances. It’ll be expensive, but Government intervention is needed to weather the storm. As well as additional money going in to businesses, payment holidays for businesses on things like PAYE, NICs, or other taxes will help manage outgoings, too.”
“The focus on loans could store up problems later: these loans will need to be paid back. Grants for small businesses will help, but larger businesses aren’t immune to the impact of COVID-19.”
“The first step any business in difficulty should take is to seek professional advice. There are options out there. Speaking to creditors will also be key, and the earlier businesses do this, the earlier they may be able to rearrange payment terms.”
Jonathan Geldart, Director General of the Institute of Directors, said “The Chancellor’s promise to do whatever it takes is the message business leaders needed to hear. It’s now vital to make sure businesses are able to take up the pledges that have been made before too much damage is done. Many have so far felt reluctant to take on loans with the road ahead uncertain.”
“No matter the sheer size of today’s measures, the fight won’t be over. As the Chancellor said, this is only the latest step, and Government must continue to listen to business leaders and be ready at hand to deliver further measures where needed. Support for employment and the self-employed will be essential as the economy experiences this historic disruption.
“Going forward, it’s crucial that the Government’s economic policy ties up with its wider response to the pandemic. Directors are hanging on every announcement to see how it affects their business and their people. Support for businesses must match up to what is being asked of them, or firms could go under. Business groups like the IoD will play their part and get the message out.”
Robert Alster, Head of Investment Services at Close Brothers Asset Management sid “The Chancellor has now promised to do ‘whatever it takes’ to prop up the UK economy and, judging by the immediate reaction to his measures, the market is beginning to believe him. ”
“However, in the cold light of day it’s clear that Rishi Sunak’s emergency loan package risks not being enough for the UK’s many small and medium sized businesses, in desperate need of capital, who might be unwilling to take on debt in such an uncertain environment. This means that these firms will likely lay off staff instead, creating structural unemployment and running the risk of greatly dampening any economic rebound once the worst of the pandemic is over.”
“This crisis is set to be a marathon, not a sprint, so we expect to see more large-scale and targeted financial intervention from Government as the scale of the economic slowdown becomes apparent.”
Gareth Shaw, Head of Money at Which?, said “The measures announced by the chancellor, such as a three-month mortgage holiday scheme, are an important first step to helping millions of consumers who may face financial hardship during the coronavirus crisis.”
“The government must move swiftly to ensure those in need of assistance get clear information about how these schemes will work in practice – and that the process for doing so is straightforward, ensuring consumers can easily access the support they need in the challenging months ahead.”
Richard Pike, Sales and Marketing Director of Phoebus Software said “In what the government describes as a ‘war time scenario’ the Chancellor has announced a three-month payment holiday for mortgage borrowers in difficulty. The devil will be in the detail on this one however for lenders that don’t already offer payment holidays as part of their standard terms and conditions. Lenders will need to weigh up which borrowers to grant this to, while borrowers will want to know that this doesn’t impact on their credit record. With the government’s £330billion of loans funding for lenders shouldn’t be an issue but banks and lenders will surely be glad of the buffers that they have built up over the past few years. Be prepared to see arrears figures increase over the coming months as the full economic effect of this issue really kicks in.”
TUC General Secretary Frances O’Grady said “The Chancellor’s announcements so far will help protect businesses. But he must now urgently step up the protections that workers need too. Many other counties are using government wage subsidies to stop job losses and keep up economic activity. We need it too. And government support to businesses must be conditional on them producing a plan to protect jobs and wages.”
“Unions and business want to fully play their part in protecting the nation. The government must urgently bring them together a national taskforce, so we can put these measures into action in the best way for working people and our economy.”