Last month, Chancellor of the Exchequer Rishi 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.
Updating MPs today on the support available to businesses, the Chancellor outlined a new 100% government-guaranteed loan scheme specifically for amounts up to £50,000.
Chancellor Rishi Sunak: "a bridge"
Rishi Sunak MP told the House that there should be "no doubt" about the serious effects the coronavirus will have on both the UK and the global economy. He stated that more than one and a half million new claims have been made to universal credit, over 4 million jobs have now been furloughed and around a quarter of businesses have ceased trading.
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.
The Chancellor announced the launch of a new "micro loan" scheme providing a "simple, quick, easy solution for those in need of smaller loans", which he termed "bounce back loans". These loans would cover 25 per cent 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.
Mr Sunak said that the loans would be available from 9am next Monday and that payments would be made within 24 hours of approval, with "no complex eligibility criteria".
"The most important thing we can do to protect our economy is to protect the health of our people."
Anneliese Dodds: "key elements of the package are failing"
Responding on behalf of the Government/Opposition, Anneliese Dodds, said that Purchasing Managers' Index figures that came out last week indicated a "sharp fall" in business confidence, indicating that confidence had fallen more dramatically in the UK than in the rest of the Eurozone.
The Shadow Minister said that although the Opposition welcomed several aspects of the Government's support package for businesses, "some other key elements of the package are failing". She asked the Chancellor how he will ensure banks have the capacity to approve the business loans at the rate they're needed.
Ms Dodds noted that 1 in 10 of workforce are set to be unemployed because of the crisis, with their only option to apply for Universal Credit. She criticised the Government's refusal to change the advance payment as a loan rather than a grant (Universal Credit requires a five-week waiting period, with the Government allowing those accessing the scheme to receive their first payment early, but they must pay this back).
The Shadow Chancellor said that prior to the coronavirus pandemic we had an economy "that for so many simply did not work", with around a quarter of families lacking £100 in savings and the "longest squeeze on living standards [...] in eight generations", and asked the Chancellor to help "those hit hardest" by developing "employment boosting, redeploying and retaining schemes".
The Shadow Minister of State concluded:
"Will he work together with me, trade unions, businesses and local authorities to develop a plan?"
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