Credit, Collections & Insolvency News
The Treasury has announced extensions of its business loan guarantee schemes until the end of March. These had been due to close at the end of January.
The new round of funding from the Treasury covers the Coronavirus Business Interruption Loan Scheme, the Bounce-Back Loans Scheme and the Coronavirus Large Business Interruption Loan Scheme. Bounce-back loans carry a full guarantee from the Government for up to £50,000, while the other schemes have a guarantee that covers banks for about 80% of the value of the loan
The Chancellor also confirmed that the Budget will be on the 3rd March 2021. the budget will also set out the next phase of the plan to tackle the virus and protect jobs
Chancellor of the Exchequer Rishi Sunak said “Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.”
“We know the premium businesses place on certainty, so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.”
Business Secretary, Alok Sharma, said “While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.’
“Extending government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”
“The schemes have already provided over £68 billion in guaranteed loans, and helped to keep afloat business in all sectors of the UK economy who have been impacted by coronavirus.”
“We are extending the schemes now, ahead of Christmas and further into the new year, to ensure that businesses can continue to access the support they need to grow and recover.”
The government hasdalready announced that more support will be available beyond March, through a successor loan scheme. More details of the scheme will be announced in due course, with the government providing a further update on wider Covid-19 economic support in the Budget.
The Money Advice Trust, the charity that runs Business Debtline, has welcomed the Chancellor’s extension of the government-backed Covid-19 business loan schemes but has called for greater clarity on what will happen where business owners cannot meet repayments.
Joanna Elson CBE, Chief Executive at the National Debtline and Business Debtline, said “Today’s extension of the government backed Covid-19 business loan schemes is welcome and comes at a time when many businesses are facing an uncertain future. However, while these loans have provided much needed support, those who have already taken out loans and are worried about repaying, need certainty too.”
“More than a quarter of self-employed people we surveyed in receipt of one of these loans said they were not confident they would be able to repay. The Government needs to be clear on what will happen to business owners who cannot meet their repayments. This needs to include ensuring that the approach taken to recover any loans is fair and affordable – a difficult financial situation should not be made worse by inappropriate collection tactics.”
“More widely, the Government need to think about how to support those with unaffordable loans longer-term. A Student-Loan-style repayment scheme for small business owners who have taken out government-backed loans they can no longer afford to repay could be one option.”
