The Chancellor Rishi Sunak has this morning beefed up the government’s support measures for smaller businesses after severe criticism of his previous announcement last week revealing its Coronavirus Business Interruption Loans Scheme or CBILS.
It provides loans of up to £5 million repayable over six years for SMEs that are losing revenue and seeing their cashflow disrupted as a result of the Coronavirus outbreak.
Operated through 40 accredited lenders, CBILS was initially offered to those who could not access regular commercial business loans, and many banks were requesting personal guarantees from directors and charging high interest rates.
Instead, property industry firms will be relieved to hear, CBILS lending is now available to all SMEs and directors requesting loans under £250,000 will only have to make personal guarantees for 20% of the money borrowed.
HM Treasury has also urged lenders to charge ‘reasonable’ interest rates when making credit decisions.
Also, HM Treasury had already prevented lenders from insisting that company owners put up their homes to guarantee loans, and it will continue to cover the first twelve months of interest and fees.
The changes to CBILS will go live on Monday, 6th April.
“We’re pleased that the Chancellor is listening and responding to the real-world concerns posed by firms across the UK who are urgently trying to access financial support,” says Adam Marshall, Director-General, British Chambers of Commerce.
Mike Cherry, Chair of the Federation of Small Businesses, says: “Taking on debt at the current time is a daunting prospect for many small businesses and the self-employed.
“We look forward to continuing our constructive engagement with government to ensure that debt can be repaid in an affordable way that allows small businesses to recover from this crisis and to thrive again.”