The chancellor Rishi Sunak is reportedly set to overhaul the government’s emergency coronavirus loan scheme over concerns that small and medium sized businesses may go bust before they can access the funds.
Sky News reported Sunak is set to announce that the requirement for banks to assess whether companies are eligible for other funding products before allowing them to access the Coronavirus Business Interruption Loan Scheme will be scrapped.
The report said Sunak and his Treasury officials have been in talks with lenders such as HSBC, Barclays, Royal Bank of Scotland and Lloyds Banking Group over the changes.
The change would be designed at speeding up decision making within banks to help companies access the loans of up to £5m.
The move would follow controversy over the way the banks have administered the scheme, with reports business-owners are being denied loans or forced to use standard loan products.
Under the reformed scheme, any viable business with a turnover of up to £45m will be able to access the programme.
The loan will be interest and charge free for the first 12 months, but companies will have to show they are viable and have the ability to pay back the loan.
Banks have also been heavily criticised for insisting on personal guarantees from directors, even though the government is guaranteeing 80 per cent of the loan.
The report said banks have agreed to waive any outstanding demands for personal guarantees on loans up to £250,000.
Personal guarantees on loans above £250,000 will be used to cover the 20 per cent of the loan not underwrite by the government, the report said citing sources.
The Treasury declined to comment.