Small businesses can receive £50,000 ‘bounce-back loans’ under new government scheme

Chancellor Rishi Sunak has announced an offer of 100 per cent guarantees on “bounceback loans” of up to £50,000 for the smallest businesses affected by the coronavirus outbreak. Read more: Small businesses can receive £50,000 ‘bounce-back loans’ under new government scheme

Small businesses can receive £50,000 ‘bounce-back loans’ under new government scheme

Chancellor Rishi Sunak has announced an offer of 100 per cent guarantees on “bounceback loans” of up to £50,000 for the smallest businesses affected by the coronavirus outbreak.

But Mr Sunak resisted pressure to increase the current 80 per cent guarantee on loans under the Coronavirus Business Interruption Loan Scheme (CBILS) to cover their full value.

Businesses and banks have blamed the limit on the guarantee for the relatively slow provision of the emergency credit, which has so far seen just 16,000 CBILs loans issued, compared with more than 250,000 in the equivalent scheme in France, and more than 100,000 in Switzerland.

Tory backbenchers, Bank of England governor Andrew Bailey and former chancellor George Osborne have been among those calling for a change of course and it was muted that Sunak was going to agree to £25,000 loans for small business 100% backed by the government so his announcement of double the sum available has come as a surprise to many.

Mr Sunak told the House of Commons that the new micro-loan scheme is designed to help small businesses struggling to access credit during the current lockdown.

Companies will be able to apply for bounceback loans, free of interest for the first 12 months, up to the value of 25 per cent of their turnover, with a cap of £50,000.

Available from 9am next Monday, the loans will not be subject to business liability tests or complex eligibility criteria, he said.

Describing them as “ a simple, quick, easy solution for those in need of smaller loans”, Mr Sunak said that most eligible firms will be able to access them by filling out a standard form, with funds available within 24 hours of approval.

Sunak rejected a broader extension of emergency credit guarantees or grants as an unacceptable burden on taxpayers to support businesses which might be unviable even without the blow to trade from coronavirus.

“I’ve heard some calls for government to underwrite all our loan schemes with 100 per cent guarantees,” said the chancellor. “I remain unconvinced by the case and for doing that universally.

“We should not ask the ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums to businesses who may in some cases have very little prospect of paying those loans back, and not necessarily because of the impact of the coronavirus.

“So I do not think it is appropriate to provide 100 per cent guarantees on all of our schemes.

“Instead, these new bounceback loans carefully target that extraordinary level of state support at those who need it most. And the £50,000 balances the risk to the taxpayer with the need to support our smallest businesses.”

Labour’s shadow chancellor Anneliese Dodds said Mr Sunak’s announcement would be a “relief” for businesses, but said the UK had “an enormous mountain to climb” to match other countries’ support for smaller firms.

“It’s a relief to hear from the chancellor that he’s listened to calls from this side of the House, business, and others that we need a full guarantee for at least some loans – he stated those of up to £50,000,” said Ms Dodds.

“But we need to be clear the UK has an enormous mountain to climb in this area. Switzerland has a population of under 9 million, yet it approved four times as many loans within its first week than the UK has done in a month.

“We’re running out of time, so can I ask the chancellor how he will ensure that banks back loans and get (them) to those businesses that need it. How will they get out of the door and what plans does he have to ensure the capacity will be there in banks to provide those loans?”

Commenting on the announcement Dame Carolyn Fairbairn, CBI Director-General, said: “The Chancellor’s new 100% guaranteed loan scheme for small businesses is transformational. Sole traders, micro-firms and entrepreneurs will now have a simple route to fast finance to stay afloat, without red tape or time-consuming checks. “Thousands of businesses could be saved by this lifeline. Banks now need to continue their work in overdrive to get the loans flowing faster.

“It’s good to see the Chancellor listening to business, proving that where there’s a need to adjust schemes, he will do what it takes. It will be vital to maintain this approach in the months to come. Every job saved today will ensure a faster recovery tomorrow.”

Stephen Jones, Chief Executive of UK Finance, added his thoughts on the announcement: “Finance providers are committed to helping small and medium sized businesses through these tough times and the new Bounce Back Loans scheme (BBLS) announced by the Chancellor today will make it simpler and faster for smaller businesses to apply through an online form and get the loans they need.

“The terms of this new scheme and the changes being made by the authorities to existing lending rules to support its launch will enable lenders approved by the British Business Bank to process these loan applications based on a short, simple online application form and for lenders to assess the applications at pace without the need for forward looking financial plans.

“The BBLS will sit alongside a broad package of support that lenders are providing SMEs including through the government’s CBIL scheme, the CLBIL scheme, as well as capital repayment holidays, extended overdrafts and asset-based finance.

“Lenders approved by the British Business Bank are now working non-stop to get the new scheme up and running from Monday. Further details will be provided for those businesses who wish to apply for a bounce back loan from the end of this week.”

Read more:
Small businesses can receive £50,000 ‘bounce-back loans’ under new government scheme

Source : Business Matters More   

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20% of UK micro-businesses set up online presence for first time, as they innovate to survive

A new survey has found that one-in-five micro businesses, with under 9 employees, have set up an online presence for the first time, equating to just over 1m micro-businesses. Read more: 20% of UK micro-businesses set up online presence for first time, as they innovate to survive

20% of UK micro-businesses set up online presence for first time, as they innovate to survive

A new survey has found that one-in-five micro businesses, with under 9 employees, have set up an online presence for the first time, equating to just over 1m micro-businesses.

A further 45 per cent have utilised social media in a new way and nearly half have improved their online capabilities, as businesses move to digital and delivery to continue selling products and services to their customers.

Changes made so far are here to stay, as a significant majority of micro-businesses asked would keep the innovations they have initiated. Three quarters say they will continue using their new online presence after lockdown is over and two thirds will keep changes they have made to products and services.

Many of these changes have taken place in just four weeks, in order to adapt to the lockdown. Rye-based GoDaddy customer Knoops are expert makers in chocolate drinks and had just opened their first London store in Clapham Junction, with plans for a second London site opening in the summer. To innovate they have launched a new range of chocolate products online, as well as a hot chocolate machine called ‘The Knoopifer’ for customers to enjoy Knoops chocolate beverages at home.

Anna Chapman from Knoops says: “Times are tough for everyone, including for micro-businesses such as ourselves. Like many others, we’ve had to innovate practically overnight to stay relevant in this new world, launching new products and services online so that people can enjoy Knoops in the comfort of their own home.

“Obviously we’re concerned about the impact a longer lockdown will have on the economy and our business in the medium-term, but right now we’re all having to get used to working from home and not being together in store.”

Their resilience is being helped by a significant shift in consumer attitude. A majority of consumers say they are more likely to shop at small, local micro-businesses to help them financially during the pandemic and of these, they will continue to do so even after the lockdown ends.

This digital resiliency comes in the context of challenging circumstances, with a third suggesting that if there was to be another two months of lockdown, they would expect a 50% drop in sales, and 38 per cent would be pushed into greater debt.

Irana Wasti, GoDaddy Regional President for EMEA said: “The pandemic has put extraordinary demands on the 5.6 million micro-businesses in the UK. They are vital to our economy and we have seen how resilient and determined entrepreneurs are to get through this – and for micro-businesses, it has meant nothing short of the second digital revolution, with a fifth moving their business online for the first time.

The outbreak is accelerating change that GoDaddy has seen with micro-businesses for a long time, with a move to online and ecommerce products and services.

“We want to support our customers through this testing time and that’s why we set up our Open We Stand micro-site to help our community of customers.”

Another micro-business which has adopted a new digital approach to meet the challenges of the Covid-19 crisis is The Summerton Whisky Club. The UK based Whisky Club is a subscription service, sharing rare and unique bottles with its members.

Daniel Humphrey from The Summerton Whisky Club says: “In addition to the Club, we organise a whisky festival every year. We have been unable to hold the festival as planned but didn’t want to postpone or cancel. We sought a digital alternative – so we have chosen to run a virtual whisky festival to ensure that whisky fans have something to look forward to.

“The response has been incredibly positive, and we will be running more virtual festivals this year. Whilst Covid-19 has been a challenge for us all, we have found that it is important to try new things. These are difficult times and people understand that, so are really supportive if you are trying something new.

Many micro-businesses have risen to the COVID-19 challenge in admirable ways. GoDaddy customer Manchester Gin, a gin distillery in the North West have adapted their 1000 litre copper still, to produce hand sanitiser for their local NHS hospital.

COVID-19 has put extraordinary demands on businesses. GoDaddy is supporting its micro-business customers in this challenging time through its Open We Stand campaign. This is a dedicated micro-site for small businesses and entrepreneurs with a library of resources – including articles, videos, how-to guides – to help them adapt to the challenges presented by COVID-19.

Read more:
20% of UK micro-businesses set up online presence for first time, as they innovate to survive

Source : Business Matters More   

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