The UK’s seven largest lenders to small and medium-sized businesses have welcomed the easing of rules around lending to coronavirus-hit companies.
Bosses at Barclays, Danske, HSBC, Lloyds, NatWest, Santander and Virgin Money said the move would allow money to flow through to firms faster.
In a joint statement, the banks and trade body UK Finance, said: “Following the changes to the scheme announced today, lenders will only ask businesses for information and data they might reasonably be able to provide at speed, and we will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability.”
1/ Today, we're announcing a new loan scheme. A simple, quick, easy solution for those in need of smaller loans.
Businesses can apply for new Bounce Back Loans up to a maximum of £50,000, or 25% of turnover, with the government paying the interest for the first 12 months. pic.twitter.com/aBYcUkR9sR
— Rishi Sunak #StayHomeSaveLives (@RishiSunak) April 27, 2020
The new rules from the Government mean businesses applying for loans will be able to defer payments for a year, including interest.
Companies who have received bailouts elsewhere from the Government, either through grants from local authorities or tax holidays, will still be able to apply for the new loans.
And those who have already received a payment via the Coronavirus Business Interruption Loan Scheme (CBILS) can transfer the loan to the new bounce back scheme.
The bank bosses added: “The reforms to CBILS announced… provide welcome changes that should enable banks to provide finance to businesses more quickly alongside other forms of support including capital repayment holidays.”
The new loans will also not require any personal guarantees against a business owner’s property or car.
Elsewhere, there was positive reaction.
.@RishiSunak new 100% guaranteed loan scheme for small biz provides a lifeline to thousands of smaller firms with minimum checks & paperwork. Sole traders, micro-businesses & entrepreneurs now have a simple route to fast finance to help stay afloat during this difficult time. pic.twitter.com/XmtdTNHgtQ
— CBI (@CBItweets) April 27, 2020
Dame Carolyn Fairbairn, Confederation of British Industry (CBI) director-general, said the plan was “transformational”.
She added: “Sole traders, micro-firms and entrepreneurs will now have a simple route to fast finance to stay afloat, without red tape or time-consuming checks.
“Thousands of businesses could be saved by this lifeline. Banks now need to continue their work in overdrive to get the loans flowing faster.”
British Chambers of Commerce director-general Adam Marshall said: “The Chancellor has demonstrated he is listening to the concerns of our business communities and taking steps to get cash to the front line where it is needed.
“This new route for our smallest companies to apply quickly and get a fast decision will be crucial to those who have struggled to get a CBILS loan.”