Chancellor Rishi Sunak has announced a raft of new measures to continue supporting small businesses during the pandemic, including the extension of the application deadline for all of its emergency loan schemes to the end of the year.
The four schemes comprise the coronavirus business interruption loan scheme (CBILS), the coronavirus large business interruption loan scheme (CLBILS), the bounce back loan scheme (BBLS) and the future fund.
Sunak’s Winter Economy Plan, announced in parliament, also confirmed that BBLS and CBILS loans can now be extended from six to 10 years.
Additionally, he introduced Pay As You Grow – an extension to BBLS to give businesses more time and flexibility to repay their loans.
As well as the loan extension, businesses can now choose to make interest-only payments and can apply to suspend repayments altogether for six months.
No business taking up Pay As You Grow will see their credit rating affected as a result.
Sunak (pictured) also confirmed that the government guarantee on CBILS loans will be extended for up to 10 years, which he said will make it easier for lenders to give people more time to repay.
The chancellor added that the Treasury is staring work on a new, successor loan programme, set to begin in January 2021.
“Over the last six months, we’ve supported business with tens of billions of pounds of tax deferrals and generous, government-backed loans,” Sunak said.
“Those policies have been a lifeline.
“But right now, businesses need every extra pound to protect jobs rather than repaying loans and tax deferrals.”
Alternative lenders welcomed today’s announcement.
“The extension of the application deadline, although modest, will enable more businesses to access funding,” said Ravi Anand, managing director at CBILS-accredited lender ThinCats.
“The flexibility on payments and terms will help businesses manage their costs and give lenders more confidence to support companies out of the pandemic, enabling long term and sustainable growth.
“Additionally, the new scheme next year should give the wider business community time to plan with greater confidence knowing that funding should be available.”
Chirag Shah, chief executive of Nucleus Commercial Finance, said that the loan scheme extensions would be welcome news for business owners across the country,
“SMEs are the backbone of our economy, and we hope these measures will provide British businesses with the support they need at this challenging time,” he added. “But while this announcement provides immediate relief to small businesses, the chancellor must also deliver long-term plans to ensure they can not only survive the Coronavirus crisis, but thrive for years to come: this is where the alternative finance industry has a vital role to play.”
Josh Levy, chief executive of Ultimate Finance, called the changes a “positive step”.
“Whilst the devil will be in the detail and it’s unclear whether this goes far enough in terms of targeted support for the most impacted sectors, it does nonetheless feel like a positive step in smoothing the various cliff-edges for SMEs that were so obviously looming,” he said.
“Non-bank lenders have a critical role to play in funding SMEs through this crisis and enabling the return to growth. As a CBILS accredited lender we’re pleased that businesses will have the opportunity to continue accessing funding under these schemes until the end of the year with plans for a replacement scheme in 2021.”