Government extends Covid-19 support schemes ahead of lockdown
The government has extended applications for its Covid-19 support schemes and the future fund to 31 January 2021 ahead of the start of England’s second lockdown on Thursday 5 November.
The coronavirus business interruption loan scheme (CBILS), coronavirus large business interruption loan scheme (CLBILS), the bounce back loan scheme (BBLS) and future fund were previously due to close for applications on 30 November.
The Treasury has also announced the rules of BBLS will be adjusted to allow those businesses who have borrowed less than their maximum, less than 25 per cent of their turnover, to top-up their existing loan.
Businesses will be able to take-up this option from next week and they can make use of this option once.
Read more: More than £61bn borrowed via government-backed loan schemes
Stuart Law, chief executive of CBILS accredited peer-to-peer lending platform Assetz Capital, said he expected an extension of the loan schemes to support businesses during the lockdown and firms looking to expand and hire staff.
“The financial support needs to continue across all sectors,” he said.
“Without a shadow of a doubt over the next few years people will have to retrain and move industry and sector so I believe government support for lending needs to be aimed at both good and challenged businesses.
“There will be viable businesses struggling for the next year or more that will need funds and there will be strong businesses which will need finance to expand in order to take on workers moving from damaged sectors.
“I wouldn’t be surprised seeing CBILS extended to June, only then will we see the new economic normal, and then whatever follows will likely be similar to CBILS without the government paying the first year’s fees I believe.
“The government knows the economy needs to go through a big pivot and that costs money so you can’t take away the ability to lend.”
Stephen Pegge, managing director of commercial finance at UK Finance, welcomed the extension.
“The banking and finance industry is providing unprecedented support to help businesses throughout these tough times, with over 1.4 million firms receiving financing so far under the government-backed lending schemes,” Pegge said.
“The extension of the application deadline to January 31 2021 will provide additional time to enable more businesses to access the finance they need, including those impacted by the latest lockdown restrictions.
“In addition, firms that have not yet borrowed their maximum under BBLS will be able to top up their loan should they need more finance to help them through the difficult weeks ahead.
“We now look forward to working with the Treasury and British Business Bank to finalise the details of these changes over the coming week.”
Read more: MPs call for quick replacement of bounce back loan scheme
In September, when launching his Winter Emergency Plan, Sunak said the Treasury is starting work on a new, successor loan programme to the current support schemes, set to begin in January 2021.
Law has previously said that he expects Assetz Capital to take part in the new scheme while fellow P2P lender Folk2Folk has also expressed interest in participating in it.
