Chancellor Rishi Sunak will announce a more stringent state-backed successor scheme to the current coronavirus support programmes in next week’s Budget.
According to the Financial Times, the new scheme will launch at the beginning of April following the 31 March deadline date of the coronavirus business interruption loan scheme (CBILS), coronavirus large business interruption loan scheme (CLBILS) and bounce back loan scheme (BBLS).
It is thought that the scheme will have more stringent criteria as it aims to wean companies off state support, support the economic recovery, prevent the fraud seen in BBLS and to gradually end the distortion in the loans market that the government programmes have caused.
The Financial Times has reported that the successor scheme is expected to offer loans of up to £10m with an 80 per cent government guarantee, more stringent criteria and interest rates capped at about 15 per cent – much higher than BBLS’ 2.5 per cent.
Sunak (pictured) is reportedly looking to bring back personal guarantees, similar to those seen in CBILS, which would apply to anyone looking to borrow more than £250,000.
It is also expected that Sunak will extend other Covid-19 support measures such as business rates and VAT relief, the furlough job support scheme and the stamp duty holiday.
Both Funding Circle and Assetz Capital, which have been delivering CBILS loans, have previously said they expect to take part in the successor scheme.
Folk2Folk and Ablrate have also expressed interest in participating in the successor scheme.
The Treasury has been contacted for comment.