Chancellor Sunak ‘Planning to Overhaul Business Interruption Loan Scheme’

Chancellor of the exchequer Rishi Sunak is planning to overhaul the recently introduced Coronavirus Business Interruption Loan Scheme, with evidence emerging that the associated funds aren’t always reaching the companies that desperately need them.

The scheme was set up last month to bolster the finances of SMEs who’ve been hit badly by the coronavirus crisis but many thousands of small and medium-sized businesses are nonetheless being pushed close to the brink of insolvency.

According to Sky News, the chancellor is now looking at ways redesign the loan scheme to ensure it gets better at delivering loans to where they’re needed most.

A key part of the problem has been that banks were given responsibility for deciding whether SMEs should be granted access to government-backed emergency loans, with the effect being that too few are getting the necessary approvals.

Reports suggest that Mr Sunak will be looking for ways to speed up assessment processes and make it more likely that companies who apply for loans can access the cash they need.

Sky News has said that the chancellor has been in discussions with representatives of the UK’s main high street banks to establish some revised rules around how the emergency loan scheme will function.

The goal is reportedly to create a situation in which any viable business with a turnover worth up to £45 million can get access to loans worth up to £5 million on an interest-free and fee-free basis for the first 12 months.

The government is also understood to want banks to commit publicly to only modestly increasing their interest rates on the emergency loans once the first year has passed.

A notable challenge for banks as they work to play their part in distributing the government’s emergency loan funding is that so many of their branches across the country are currently closed or operating reduced opening hours.

Meanwhile, from the perspective of SMEs, the situation is increasingly perilous, with hundreds of thousands of businesses understood to be a matter of weeks away from collapse.