Rishi Sunak to extend government coronavirus business support

Originally written by Timothy Adler on Small Business Chancellor Rishi Sunak is set to extend all four of the UK’s emergency coronavirus business support schemes until the end of November. Until now, the Treasury has resisted calls from business groups to extend the Coronavirus Business Interruption Loan Scheme (CBILS), in particular. The CBILS is due to expire at the end of October with Rishi Sunak to extend government coronavirus business support

Rishi Sunak to extend government coronavirus business support

Originally written by Timothy Adler on Small Business

Chancellor Rishi Sunak is set to extend all four of the UK’s emergency coronavirus business support schemes until the end of November.

Until now, the Treasury has resisted calls from business groups to extend the Coronavirus Business Interruption Loan Scheme (CBILS), in particular. The CBILS is due to expire at the end of October with the Bounce Back Loans scheme following shortly thereafter in November.

However, given this week’s expected further semi national lockdown, according to the Financial Times, the chancellor has bowed to the inevitable in extending all coronavirus business support schemes, which have already backed £53bn in lending to business through government guarantees.

Second national lockdown

The news comes as a thinktank warns that a second national lockdown would cost the economy £250m a day as people are kept out of pubs and restaurants and encouraged to work from home.

The Centre for Economics and Business Research (CEBR) warned that GDP could fall by between 3 per cent and 5 per cent in the last three months of this year compared with the third quarter.

Although the £250m figure is a tenth of the impact of the full-blown lockdown at its peak in April, CEBR deputy chairman Rishi Douglas McWilliams said that a second national lockdown could “knock the stuffing out of consumer and business confidence”, with an impact on investment, business closures and jobs.

Douglas McWilliams said: “Whereas the first lockdown was bearable on the assumption that it was temporary, a second lockdown will make many people lose confidence in a recovery in the foreseeable future … tens of thousands of businesses are hanging on by a thread and likely to run out of cash, meaning that the risk of major job losses when furlough ends is still acute.”

The majority of state-backed business support has been through Bounce Back Loans, which offer loans of up to £50,000 on an interest-free basis and which more than 1.1m businesses have taken out, borrowing £35bn. More than 60,000 businesses have borrowed £13.7bn using the Coronavirus Business Interruption Loan Scheme, which back loans of up to £5m. And the Coronavirus Large Business Interruption scheme — which part-guarantees loans of up to £200m — has backed £3.5bn worth of lending.

Extend until December

Meanwhile, Innovate Finance and a range of non-bank lenders, as well as Starling and Oaknorth, have written to Mr Sunak asking for CBILS to be extended until the end of December.

After that, the fintechs want the chancellor to develop a permanent, less generous guarantee programme, which would help non-bank lenders such as themselves to meet the demands from small businesses.

“Without government guarantees,” Innovate Finance chief executive Charlotte Crosswell told the , “sufficient wholesale funding for non-bank lenders may be challenging to meet all the demand from SMEs.”

Rishi Sunak to extend government coronavirus business support

Source : UK Small Businesses More