Chancellor Rishi Sunak is set to extend the government’s coronavirus loans schemes in an effort to protect the UK economy during a possible second wave of Covid infections.
The four business loans schemes will be extended for applications until the end of November, the Financial Times reported. Banks will be allowed to process the loans until the end of the year.
It comes as the government considers new lockdown measures that could derail the economic recovery.
Sir Patrick Vallance, the government’s chief scientific officer, today warned there could be around 50,000 new coronavirus cases per day by the middle of October if things go on as they are.
Chris Whitty, England’s chief medical officer, said people must “break unnecessary links between households”. That would mean cutting contacts at work and in social environments, which would likely slow economic activity.
Sunak had previously seemed keen to wind down the UK’s costly fiscal stimulus measures. But last week he said he would be “creative” in supporting the economy.
Coronavirus loan scheme applications extended
The government launched the coronavirus business interruption loan scheme (CBILS) in March to help banks lend to struggling firms by guaranteeing 80 per cent of the total. It also created a scheme for bigger firms.
It then launched the bounce back loan scheme (BBLS) in May, following criticism that CBILS lending was too slow.
BBLS has a 100 per cent government guarantee and has done the bulk of the coronavirus lending. It has seen banks give out more than £35bn to 1.1m firms. Altogether, the schemes have lent out around £53bn.
The two CBILS schemes and the future fund for start-ups were scheduled to close for applications this month. BBLS was supposed to close on 4 November.
But the government will extend the application dates for all the schemes until the end of November, the Financial Times reported, citing sources familiar with the talks. The Treasury declined to comment.
Sunak is also facing heavy pressure to extend the furlough scheme – which has supported more than 9m jobs – in some form.
The chancellor has repeatedly said it will end in October. However, he said last week he would continue to “act in creative and effective ways to support jobs and employment”. That prompted speculation that he could create a new wage support scheme for certain industries.