U.K. Plans Loan Program to Boost Small Companies After Pandemic
Chancellor of the Exchequer Rishi Sunak is drawing up plans for a new state-backed loans program for small- and medium-sized companies to help U.K. businesses recover from the pandemic-induced recession.
Though the details of the plans are still being finalized, the aim is to provide a a permanent replacement for the government’s coronavirus support programs, according to a person familiar with the matter. Commercial banks have approved about 65 billion pounds ($87 billion) of state-backed loans under three programs rolled out by Sunak to tide companies through the crisis.
Ministers want to ensure businesses can both rebound from the pandemic and cope with any uncertainty following the end of the Brexit transition period on on Dec. 31. Sunak pledged to outline a new loan program in January when he announced a winter economy plan in September.
“We are working on a new successor loan scheme and will provide more details in due course,” the Treasury in a statement Monday.
Banks have lent out 42 billion pounds under the Bounce Back Loan Scheme, which is 100% guaranteed by the state, with a further 23 billion pounds loaned under the 80%-guaranteed Coronavirus Business Interruption Loan Scheme and a similar program for large companies. They run to the end of January.
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The new program is likely to have more rigorous checks than the lighter touch approach used to enable the rapid roll-out of the Bounce Back loans, according to the person.
Sunak is planning to guarantee as much of 80% of loans worth up to 10 million pounds, according to the Financial Times, which first reported the new program. The interest rate on the loans is likely to be capped at 15%, it said.
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