The Indian-origin UK Chancellor of the Exchequer on Monday told the House of Commons that the new fast-track finance scheme, to open from next Monday, would help bolster the existing package of support available to crisis-hit UK businesses. Under the scheme, qualifying small businesses can apply online to borrow between 2,000 pounds and 50,000 pounds as interest-free loans for the first 12 months.
"Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis," Sunak said.
"This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses," he said.
Sunak said his coronavirus support schemes had already provided over 15 billion pounds for business over the last few weeks, which will be further boosted with this new scheme.
The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days. It comes alongside the 6 billion pounds awarded in business grants, supporting 4 million jobs through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms, the UK's Treasury Department said.
It said it had been consulting extensively with business representatives on the design of the new scheme, which will provide lenders with a 100 per cent guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.
The loans are expected to be easy to apply for through a short, standardised online application, and they should reach businesses within days providing immediate support to those that need it as easily as possible.
"Our small businesses are vital in ensuring our communities thrive and will be crucial in creating jobs and securing economic growth as we recover. This rapid loan scheme offers additional protection so small companies across the country can get access to the finance they need immediately, as part of the unprecedented package of support we have put in place," UK Business Secretary Alok Sharma said.
Firms will be able to access these loans through a network of accredited lenders. The government will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and agree a low standardised level of interest for the remaining period of the loan.