Rishi Sunak launches new loan scheme with £10m business grants to kickstart economy after lockdown
- Firms will access loans of between £25,000 and £10million to get back on track
- Recovery Loan replaces a string of earlier ones including the Bounce Back loans
- Ministers were under pressure to reform the Bounce Back scheme after review
Rishi Sunak has launched a new loan scheme with grants of up to £10million to help firms to restart after lockdown.
The Recovery Loan replaces a string of earlier ones – including the popular Bounce Back loans which have lent more than £46billion in the last year.
Firms will be able to access loans of between £25,000 and £10million to get back on track.
Mr Sunak said: ‘We have stopped at nothing to protect jobs and livelihoods throughout the pandemic’
The Recovery Loan replaces a string of earlier ones – including the popular Bounce Back loans which have lent more than £46billion in the last year
The Government will guarantee up to 80 per cent of the sum although this is less generous than some of the 100 per cent backed loan schemes which preceded it.
Mr Sunak said: ‘We have stopped at nothing to protect jobs and livelihoods throughout the pandemic and as the situation has evolved we have ensured that our support continues to meet businesses’ needs.
‘As we safely reopen parts of our economy, our new scheme will ensure that businesses continue to have access to the finance they need as we move out of this crisis.’
Interest rates have been capped at 14.99 per cent and ministers have urged lenders to keep rates down in a bid to ensure business owners pay less than the ceiling figure.
Ministers were under pressure to reform the Bounce Back scheme after the National Audit Office warned last year it could result in a ‘very high level of losses’ to the taxpayer.
Rain Newton-Smith, chief economist at the CBI, welcomed the new scheme, adding: ‘The coronavirus loan schemes have provided a critical lifeline to businesses, and so its successor – the new Recovery Loan scheme – comes as a huge relief to firms.
‘It’s vital support remains as restrictions relax and demand returns to normal, allowing businesses to recover, save jobs, and support for reopening.’
The Recovery Loan Scheme is permitted for use as an additional loan on top of support received from the emergency schemes put into place last year.
Bounce back loans were first unveiled in late April last year and became available to businesses just days later in early May.
With the higher guarantee, and less rigorous controls from lenders, the bounce back loans have proven by far the most popular of the three schemes, both in terms of the number of loans granted and the total amount lent.
By February 21, more than 1.5 million businesses had been lent £45.6 billion in total, with another half a million having applied.
Business Secretary Kwasi Kwarteng said: “We’re doing everything we can to back businesses as we carefully reopen our economy and recover our way of life.
“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.”