Sunak set to extend business support loans

By James McAllister

- Last updated on GMT

Chancellor Rishi Sunak to extend business support loans

Related tags: lockdown, Coronavirus, loans, Government

Chancellor Rishi Sunak is to extend the Treasury’s UK-wide programme of business support loans.

As first reported by the Financial Times​, the Chancellor is expected to unveil plans this week to extend the Government's four Coronavirus loan schemes in an effort to cushion the UK economy from a second wave of Coronavirus infections.

The decision is designed to help companies once again hit by further lockdowns, either at a regional or national level; or forced to close their doors again under new curfews.  

Under plans being drawn up by the Treasury, the business loan schemes will be extended for applications until the end of November, with banks allowed to process loans until the end of the year.

Three of the programmes had been due to close to new applications at the end of this month.

They include the Coronavirus Business Interruption Loan scheme (CBILs) and Coronavirus Large Business Interruption Loan Scheme (CLBILs), which each offer 80% Treasury backing on loans made by commercial banks.

The fourth programme, know as the 'bounce back' loan scheme, which is only available only to the UK’s smallest businesses and gives 100% state backing to loans worth 25% of turnover up to £50,000, was originally due to expire at the start of November.

According to the FT​, the extension is set to include the Future Fund, a support programme that could see the Government take stakes in scores of fast-growing start-ups forced to take state-backed convertible loans.

Almost £53bn of Government-backed loans have been loaned to businesses since March. 

The majority of the state-backed loans have been through the 'bounce back' scheme, which has been used by more than 1.1 million businesses so far, borrowing more than £35bn.

More than 60,000 businesses have borrowed £13.7bn using CBILs, while CLBILs has helped lend £3.5bn.

News of the loan extensions come as pressure mounts on the Chancellor to also extend the Coronavirus Job retention Scheme (JRS) when it ends on October 31, or replace it with a more flexible system. 

Giving evidence to the House of Lords Economic Affairs Committee last week, UKHospitality chief executive Kate Nicholls warned that at least 900,000 hospitality jobs are at risk unless Government offers a sector-specific package of employment support​ that helps businesses retain valuable workers.

The proposals include asking the Government to part-fund hours for businesses that have returned, paying up to 50% of wages for those back at work; and offer enhanced support for hospitality businesses that are closed (or part-closed) as a result of local lockdowns by covering 50% of wages, with the remainder paid by the employer.

It is understood that Prime Minister Boris Johnson will announce tomorrow (22 September) if new restrictions are to be placed on the hospitality sector, as Coronavirus cases across the UK continue to rise again.

Those restrictions could include a nationwide curfew that forces pubs and restaurants to close early each night, as has been introduced in north-east England and parts of Wales; or, alternatively, a so-called 'circuit breaker' that would see hospitality businesses ordered to shut completely for a fortnight.

Related topics: Business

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