The payback loan program is launched today
- new loan program will provide additional support to protect businesses and jobs
- the loans will include an 80% government guarantee and an interest rate cap
- To date, the government has backed £ 75bn in loans under an unprecedented £ 350bn support package
The stimulus loan program will ensure that businesses continue to benefit from government guaranteed funding throughout 2021.
With non-essential retail and outdoor hospitality reopening next week, ministers ensured that the right support was always available for businesses to protect jobs. As of today, businesses – ranging from cafes and restaurants to hairdressers and gyms – can access loans ranging from £ 25,000 to a maximum of £ 10million. Bill and asset financing is available from £ 1,000.
Chancellor of the Exchequer, Rishi Sunak, said:
We did not back down to protect jobs and livelihoods throughout the pandemic, and as the situation evolved, we ensured that our support continued to meet the needs of businesses.
As we safely reopen parts of our economy, our new stimulus loan program will ensure businesses continue to have access to the finance they need as we emerge from this crisis.
This is in addition to the extension of the leave until September 30 and the new restart grant scheme launched last week, providing funding of up to £ 18,000 to eligible businesses. The government is also complementing this with the Jobs Plan, which focuses on protecting, supporting and creating jobs across the country through the Kickstart program, T-level and a national career service.
The program, which was announced in the budget and runs until December 31, 2021, will be administered by the British Business Bank, with loans available through a diverse network of accredited commercial lenders. 26 lenders have already been accredited for the first day of the program, more to come soon, and the government will provide an 80% guarantee for all loans. Interest rates have been capped at 14.99% and are expected to be much lower than that in the vast majority of cases, and ministers urge lenders to be sure to keep rates low to help protect jobs. The Stimulus Loan Program can be used as an additional loan in addition to the support received from emergency programs – such as the Rebound Loan Program and the Coronavirus Business Interruption Loan Program – put in place. ‘last year.
So far, the government’s emergency lending programs have supported more than £ 75 billion in financing for 1.6 million UK businesses and this new program will build on that success. This is part of the government’s unprecedented £ 350 billion support package, which includes the payment of millions of workers’ wages through the holiday program and generous grants and tax deferrals.
Business Secretary Kwasi Kwarteng said:
We are doing all we can to support businesses as we carefully reopen our economy and reclaim our way of life.
The launch of our new Stimulus Loan program will provide businesses with a solid foundation on which to plan, protect jobs and prepare for a safe reopening as we rebuild better after the pandemic.
Reactions from business groups:
Rain Newton-Smith, Chief Economist of the CBI, said:
Coronavirus loan programs have provided a vital lifeline for businesses, and its successor – the new payback loan program – is therefore a huge relief for businesses.
These loans can be taken out alongside existing COVID loans to help businesses refinance, restructure and grow.
Its vital support remains as restrictions ease and demand returns to normal, allowing businesses to recover, save jobs and support reopening.
Access to finance remains essential to the vitality of a business and the launch of the stimulus loan program is therefore welcome. The new system can play a potentially pivotal role in supporting the recovery by channeling credit to businesses that need it most.
Chambers of Commerce will continue to work with government and banks to ensure businesses have the clarity they need to allow them to use the new system to help them get back to growth.
David Postings, Managing Director of UK Finance, said:
The banking and financial sector remains committed to supporting businesses of all sizes in the next phase of the pandemic response. As attention turns to the economic recovery, we know that many businesses still face uncertainty. The new stimulus loan program, along with other business financial supports, will help businesses rebuild and invest for future growth.