Banks have been banned from demanding personal guarantees from small businesses requiring emergency loans.
Chancellor Rishi Sunak made the announcement in the wake of concerns that banks were being slow to support companies in need of cash during the coronavirus crisis.
Amid concerns about the number of businesses going under and the increase in applications for universal credit from staff who had lost jobs, the chancellor announced a combined new package of support – and warned banks to move more speedily.
He had previously announced a £330bn coronavirus business interruption loan scheme (CBILS), with the government underwriting loans to companies, but felt the support was still not arriving quickly enough.
Under the revised plans the chancellor said that:
* Banks and lenders would be banned from demanding personal guarantees on loans under £250,000
* The loan scheme would be extended to cover all small companies and not just those unable to get commercial funding.
* There would be a new scheme to bolster support for larger firms not currently eligible for loans, under which the government would provide a guarantee of 80% so that banks could make loans of up to £25m to firms with an annual turnover of between £45m and £500m.