The government has launched the first stage of a £330bn loan guarantee scheme for businesses, to help small and medium-sized firms borrow up to £5m to help them weather the impact of coronavirus.
“Any viable business” with a turnover of up to £45m will be able to apply to banks for an 12-month interest-free loan, 80 per cent of which will be guaranteed by the government under its Business Interruption Scheme, the Treasury said.
“We know that businesses are in urgent need of access to funding during these unprecedented times,” said business secretary Alok Sharma, who added that the scheme “will ensure that credit keeps flowing to where it is needed, when it is needed”.
Chancellor Rishi Sunak last week unveiled an unprecedented package of measures aimed at supporting businesses and employers struggling with the economic impact of coronavirus, including tax deferrals and an employee retention scheme.
The Treasury said this morning that further measures would be announced to ensure large and medium-sized businesses could access financing.
The Bank of England this morning announced the opening of a scheme to buy up debt known as commercial paper, issued by large businesses which had an investment-grade credit rating or similar level of financial health before the coronavirus pandemic hit.
BoE governor Andrew Bailey said the corporate financing scheme would “help businesses manage through this period of uncertainty”.
“Combined with steps taken by the government, this will help companies through this difficult time and support the needs of the people of this country,” he added.
Bailey said last week that the Bank would look at widening the financing scheme to firms with lower credit quality, or buying other financial instruments such as asset-backed commercial paper.