This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
News
Small firms eligible for 100% government-backed loans
The UK government has unveiled new support for the nation’s smallest businesses under which they will be able to access 100% government-backed loans of up to £50,000 (US$62,000), but trade bodies argue ministers could have gone further.
Chancellor Rishi Sunak has unveiled a new Bounce Back Loan scheme
Chancellor Rishi Sunak announced the new fast-track Bounce Back Loan scheme yesterday (27 April), which will allow businesses to borrow between £2,000 (US$2,490) and £50,000, and access the money in a matter of days.
It has been designed to ensure companies that need “vital cash injections” to continue operating can access funds quickly, and comes in addition to the £6 billion (US$7.7bn) awarded in business grants that are supporting four million jobs through the Coronavirus Job Retention Scheme.
The UK government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.
Sunak said: “Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.
“This is in addition to business grants, tax deferrals and the job retention scheme, which is already helping to support hundreds of thousands of small businesses.”
The Bounce Back Loan scheme will open for applications next week on Monday 4 May. Companies will be able to access the loans through a network of accredited lenders.
Suppliers in need of support
The Wine and Spirit Trade Association (WSTA) welcomed the government’s new loan scheme, but said it could have gone further to help businesses.
Miles Beale, chief executive of the WSTA, said: “As we have said before, much of the announced support amounts to loans which will need to be paid back. In this instance, a ceiling of £50,000 is low and the government could have gone further.
“The burden of additional debt is particularly unattractive to businesses in the supply chain who are yet to enjoy the government support afforded to other hospitality businesses in the form of grants, but for whom, just like pubs, bars and restaurants, sales have been reduced to zero practically overnight.”
The WSTA said suppliers must be recognised for their value in the same way as other parts of the hospitality industry.
With the on-trade likely to be among the last businesses permitted to reopen, and most likely at reduced capacity due to social distancing measures, the WSTA warned suppliers will feel the effects just as acutely as the venues themselves as a result.
“The government must extend business rates exemption and availability of government grants to businesses in the on-trade supply chain, by broadening its definition of hospitality to include them,” Beale urged. “This would represent a much more supportive measure.
“The government must recognise that persisting with such a narrow definition of hospitality is harmful – there will be no hospitality sector without the businesses that keep pubs, bars and restaurants stocked.”