Government revamps emergency business loan scheme after criticism

The Treasury unveiled the new packages overnight following criticism from areas of the business community that larger companies were being left to fend for themselves and smaller organisations were being denied loans by lenders.

It has introduced a new Coronavirus Large Business Interruption Loan Scheme for firms with an annual turnover of between £45m and £500m, providing a government guarantee of 80% on loans of up to £25m.

The government has also banned banks from being able to demand debt-risking personal guarantees on loans of less than £250,000 to expedite the process.

The Treasury also announced expansions to the existing Coronavirus Business Interruption Loan Scheme, allowing all “viable” small businesses affected by the ongoing pandemic to apply – not just those unable to secure commercial funding.

Chancellor Rishi Sunak said the new measures showed the government has been “listening” to businesses both large and small.

“We are making great progress on getting much-needed support out to businesses to help manage their cash flows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country.

“And now I am taking further action by extending our generous loan scheme so even more businesses can benefit.

“We have also listened to the concerns of some larger businesses affected by Covid-19 and are announcing new support so they can benefit, too.

“This is a national effort and we’ll continue to work with the financial services sector to ensure that the £330bn of government support, through loans and guarantees, reaches as many businesses in need as possible.”

The news comes as many large retail businesses have begun furloughing staff and taking senior leadership pay cuts in a desperate bid to survive.

One banking source told Retail Week that a number of his retail clients were currently “haemorrhaging cash” and some were “maybe weeks away from going under”.

“It’s a really scary time for retailers at the moment. So many of the medium and even large-sized businesses – even with all the measures already implemented by the government – are haemorrhaging cash and are really struggling. We’re talking household retail names that had been trading well even a few weeks ago. It’s scary.”

In this week’s Secret Retailer column, a chief executive of a retail business said he had recently spoken to the chancellor with “grave concern [over] whether or not our business will survive the next three months”.