Finance minister Rishi Sunak has so far rejected calls to give a 100 percent government guarantee to lending to small businesses. UK banks are still having to take 20 percent of the risk and carry out their own, sometimes incredibly time consuming, credit checks.
The chancellor said on Monday that countries offering 100 percent loan guarantees did not have an equivalent to the grants available for 80 percent of the salary of furloughed staff.
On Thursday the CBI also claimed loans should be repayable over 10 years for businesses that face high fixed costs and low profit margins.
This gives a little more time for businesses to repay their loans than the current maximum of six.
“Helping firms that have fallen through the cracks will protect jobs and livelihoods as the crisis unfolds and ensure a solid foundation to build on,” CBI Director-General Carolyn Fairbairn said.
The CBI said these grants did not help businesses such as ferry operators or plant nurseries which needed to maintain staff to keep operations going.
The lobby claimed firms that already had high levels of debt – or those such as hotel chains that were too large to benefit from property tax waivers – were also struggling.
British banks have so far lent 2.8 billion pounds to small and medium-sized businesses with a turnover of up to 45 million pounds under the government scheme.
So far they have approved 16,624 loans since the scheme opened on March 23.
The CBI said there should be simplified procedures for loans under 25,000 pounds and that loans up to 500,000 pounds should benefit from a 100% guarantee as well as an option of repayment over 10 years.
Meanwhile, Rishi Sunak’s job retention scheme went live on Monday to help workers whose jobs have been affected by businesses having to close during the lockdown.
The scheme allows British employers to apply for a grant to cover 80 percent of their employees’ monthly wages during the coronavirus pandemic.
BBC’s business correspondant Nina Warhurst said: “It is this incredible promise from the Chancellor.
“We will pay most of your staff’s wages if you promise there will be a job for them to return to when all this is over.
“This has never ever happened before, it is monumental in scale but it was designed under pressure in the space of 48 hours and they have had less than a month to iron out the details.
“The Government will cover up to 80 percent of worker’s wages up to £2,500 a month.
“Employers can then top up the remaining 20 percent if they choose to.”
She continued: “Employers can apply online for a grant.
“It is a grant, not a loan, it doesn’t need to be paid back.
“HMRC have said that the money will be with them within days.
“We don’t know how many businesses will apply but 2 million have been contacted.”
Published at Fri, 24 Apr 2020 03:08:00 +0000