Rishi Sunak to extend all four emergency state backed Covid-19 business loan schemes amid fears about impact of second wave
The move, which may be announced as early as tomorrow comes amid increasing concerns over the fragility of the recovery and mounting job losses.
The government is preparing to address growing concerns over the economic fallout from a second wave of coronavirus infections by extending all four emergency Covid-19 loan scheme for businesses until the end of November. Almost £53bn of government-backed loans have been awarded by commercial banks to businesses since March, with the Treasury guaranteeing 80% of the value of the loans. However, three of the programmes were due to close to new applications at the end of this month, while the fourth, the “bounce back” scheme which gives banks 100% government backing, was due to expire at the start of November. Banks will be allowed to process loan applications until the end of the year.
Launched as Britain went into lockdown in March, the coronavirus business interruption loan scheme has been used by more than 60,000 firms, borrowing a total of £13.7bn, with loans of up to £5m. Commercial banks lend the money, but can recover up to 80% of the value of the loan from the government if the borrower subsequently defaults.
The large business version of the scheme has supported £3.5bn of lending and offers a similar guarantee but up to £200m.
The majority of lending has been through the “bounce back” scheme, with more than 1.1m businesses borrowing more than £35bn in loans of up to £50,000.
The Treasury will also extend the Future Fund, which offers lending to fast-growing startups alongside matched-funding from private investors. Firms can borrow up to £5m using loans that are convertible into equity stakes. Almost 600 loans worth £588m have been approved so far.
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