Rishi Sunak bans banks from asking for personal guarantees on loans under £250k to help struggling small firms
RISHI Sunak has forced banks to make it easier for small firms to get help in the virus crisis.
The Chancellor has banned them from asking for personal guarantees on loans under £250,000.
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Those needing larger amounts will have to stake only 20 per cent of personal assets and their homes will be protected from repossession.
Banks had been denying business owners access to the scheme when they were eligible for commercial loans at a higher rate, but that loophole has now been closed.
Around 130,000 companies have asked about emergency cash so far with £90million approved for 1,000 small businesses, and £1.9billion in government-backed loans to large firms.
Mr Sunak said: “We are making great progress on getting out to businesses to help manage cashflow during this difficult time.”
“We have also listened to the concerns of some larger businesses affected by COVID-19 and are announcing new support so they can benefit too.
“This is a national effort and we’ll continue to work with the financial services sector to ensure that the £330 billion of government support, through loans and guarantees, reaches as many businesses in need as possible.”
The Chancellor has also ripped up rules which say he businesses must look for other loans first before getting coronavirus-specific elp.
Now if they need the help, they can apply for either.
Bigger businesses are set for more help too.
Government will provide a guarantee of 80 per cent of up to £25million for firms with a high annual turnover of between £45million and £500million.
Its hoped the confidence will mean banks are able to be able to lend them more cash as a result.
The Chancellor will be speaking to bank Chief Executives next week to discuss how the schemes are working and ensure everybody is playing their part.
There have now been over 130,000 enquiries from businesses across the country for business interruption loans, according to latest figures from UK Finance.
And now 983 businesses have had finance approved.
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Business Secretary Alok Sharma MP said: "The coronavirus pandemic represents a challenge to businesses unlike any other they have faced before and we are determined to support them through this difficult time.
"The changes we are making to the Coronavirus Business Interruption Loan Scheme will make it easier for business to access the lending we have put in place, helping them to continue trading and protect the livelihoods of their staff."
Last week, the Chancellor and the Governor of the Bank of England, Andrew Bailey, wrote to banks asking them to support small and medium-sized enterprises in any way they can.
But banks are still charging sky-high interest to many business, which is putting them off taking out such huge sums.
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