Chancellor Rishi Sunak has outlined a new 100% government loan scheme for up to £50,000 available for small firms that are struggling to access credit to ensure they ‘bounce back’ after the Covid-19 lockdown.
In a statement to the Commons, Sunak told MPs that the new ‘micro loan’ scheme will provide a ‘simple, quick, easy solution for those in need of smaller loans’.
The loans would cover 25% of a business’ turnover, up to the £50,000, with the government guaranteeing 100% of the loan and paying the interest for the first 12 months.
He said the loans would be available from next Monday, with applications to banks via a simple form and promised that payments would be made within 24 hours of approval, with ‘no eligibility criteria’.
Mr Sunak said that the Government’s goal was to provide “a bridge over what will be a sharp and significant crisis” by keeping people employed and businesses afloat. He outlined the government initiatives available to help firms, such as the furlough scheme, business loans and business rates relief.
Last month, Mr Sunak announced a £330 billion coronavirus business interruption loan scheme. However, there were reports that the application process for the scheme was complicated, payments were delayed in reaching firms, and that banks were requesting personal guarantees (such as homes) for small loans.