A new government-backed loan scheme launches today (6 April) to help companies access finance as the economy reopens from a strict lockdown, offering maximum loans of £10 million.
Chancellor of the Exchequer Rishi Sunak said the loans under the Recovery Loan Scheme, ranging from £25,000 to 10 million, would replace existing Covid-19 programmes and be on top of a grant scheme that has been launched to help companies restart trading.
The scheme will be administered by the British Business Bank, with loans available through commercial lenders and the government providing an 80 per cent guarantee. It will run until the end of this year and interest rates will be capped at 14.99 per cent.
The government is urging lenders to keep rates down to protect jobs. The government said so far its emergency loans had supported more than £75 billion of financing for 1.6 million businesses.
“As we safely reopen parts of our economy, our new Recovery Loan Scheme will ensure that businesses continue to have access to the finance they need as we move out of this crisis,” Sunak said.
The new scheme is in addition to furlough being extended until 30 September, and the New Restart Grants scheme launched last week, providing funding of up to £18,000 to eligible businesses.
“The launch of our new Recovery Loan Scheme will provide businesses with a firm foundation on which to plan ahead, protect jobs and prepare for a safe reopening as we build back better from the pandemic,” Business Secretary Kwasi Kwarteng added.
Rain Newton-Smith, CBI Chief Economist, said the new loan scheme will be a “huge relief” to firms.
“These loans can be taken alongside existing Covid loans to help firms refinance, restructure and go for growth. It’s vital support remains as restrictions relax and demand returns to normal, allowing businesses to recover, save jobs, and support for reopening,” she said.