Rishi Sunak has said he is “not persuaded” that the government should underwrite 100 per cent of all loans in the coronavirus business loan schemes.
Speaking at today’s daily press conference, Sunak said: “I’m not persuaded moving to a 100 per cent guarantee is the right thing to do.”
The coronavirus business interruption loan scheme (CBILS) and coronavirus large business interruption loan scheme (CLBILS) offers government-backed loans to viable companies struggling because of the impact of Covid-19.
The government underwrites 80 per cent of each bank loan, taking on most of the default risk.
However, calls have grown from business bodies and Labour shadow business secretary Ed Miliband that the government should underwrite 100 per cent of each loan to increase the speed of loan approvals.
As of Wednesday last week, the country’s banks had approved 6,020 business loans worth £1.1bn through CBILS, with just one-in-five applications gaining approval.
Swiss banks managed to hand out £12.4bn of loans, that are 100 per cent guaranteed by the Swiss government, to more than 75,000 businesses in the first week of its coronavirus loan scheme alone.
Sunak said today that other governments which have offered 100 per cent guarantees on coronavirus loans did have not as many economic relief measures as the UK does.
“When you look at the totality of what we’re doing, it’s more significant in scope and in scale of most of those other countries [offering 100 per cent loan guarantees],” he said.
“Where they have used loan guarantees that are different to ours, they have done it because they’re not doing things that we’re doing for example the furlough scheme or indeed the direct cash grants.”