Money and Finance
100 per cent state-backed loans for small firms applauded by FSB
News from the Chancellor that small businesses are to get access to 100 per cent state-backed loans to help them through the coronavirus pandemic has been welcomed.
The Federation of Small Business (FSB), which represents thousands of companies across Gloucestershire and the West, called the new announcement by Rishi Sunak’s an “excellent idea”
Support for business may have been unprecedented and looked good on paper, but in reality the rescue schemes have become mired in bank credit checking and failing to deliver on the scale needed to keep companies alive.
Mr Sunak told the House of Commons yesterday that from next week the new scheme would offer firms up to £50,000 loans within days of applying.
Applicants will only need to face a two-page self-certification form online to give themselves a chance of accessing the life-support packages.
Sam Holliday, development manager (Gloucestershire and the West of England) at Federation of Small Businesses, called the announcement “potentially fantastic news for many of our micro businesses”.
“The new micro loan scheme for small businesses will see a 100 per cent government guarantee on facilities worth up to £50,000 (capped at 25 per cent of turnover) and a streamlined application process.
“This will be a real boost for many who are struggling and we hope it can be introduced quickly and efficiently to get the support to our vital small and micro businesses ASAP.
“An excellent idea which the FSB had been pushing for on behalf of our members and all small businesses.”
Under the terms of the loan Government will pay the interest for the first year, meaning no capital or interest payments fall on small businesses during that period.
Banks have come under fire for a failure to deliver previous loans to companies, blaming a shortage of staff required to manage the necessary credit checks, and a reluctance to risk underwriting so many loans.
Firms will only need to prove they were viable for a loan based on their history. Businesses were struggling to prove their future potential with the previous scheme.
Dame Carolyn Fairbairn, CBI director-general Dame Carolyn Fairbairn said: “Sole traders, micro-firms and entrepreneurs will now have a simple route to fast finance to stay afloat, without red tape or time-consuming checks.
She added: “Thousands of businesses could be saved by this lifeline. Banks now need to continue their work in overdrive to get the loans flowing faster.”