Cash will start flowing into small businesses’ bank accounts within days, the head of a Government-backed rescue scheme has said after the Chancellor promised to do whatever it takes to prop up the economy to withstand coronavirus.
Keith Morgan, the chief executive of the British Business Bank, said that many firms can apply for loans, or other debt, with their usual lenders.
“We’ve launched the scheme this week … Banks are prepared to start writing business under the scheme. I would expect money to start flowing this week for some of the loans,” he said.
Companies struggling under the weight of the Covid-19 outbreak will be eligible for up to £5 million, with 80% of the balance guaranteed by the Government.
They must be UK-based and turn over no more than £45 million every year. Their proposals to borrow money should be viable even if the virus had not hit, and banks must believe that the cash could help the business escape short-to-medium term troubles.
The Government will also step in and pay all the interest and fees for 12 months, so that the businesses have no upfront costs during a time of hardship.
Chancellor Rishi Sunak originally announced that £1.2 billion of Government-backed lending would be made available to British business. But the Government has since announced that the scheme will be funded enough to meet demand.
“Applicants are going through the normal process of applying for a loan or a facility, and the bank, or the lender will be testing the eligibility,” Mr Morgan said.
He encouraged businesses to apply via the lender’s website as telephone lines might be busy and branches may be closed because of the outbreak.
More than 40 lenders will be offering money through the scheme.
Mr Sunak said: “We are working round the clock to do whatever it takes to protect our people and businesses.
“That means that we are not only taking unprecedented action but doing so at unprecedented speed, because we know that businesses and their employees need help now.”