Chancellor Rishi Sunak considering plans to offer 100% government guarantees on loans to up to 1million of UK’s smallest firms amid mounting pressure
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The Chancellor is considering plans to offer 100 per cent government guarantees on loans to up to 1m of the UK’s smallest firms following pressure from Tory MPs and the Bank of England.
Critics of the Coronavirus Business Interruption Loan Scheme have urged Rishi Sunak to increase the guarantee from the current level of 80 per cent to 100 per cent.
Under pressure: Critics of the Coronavirus Business Interruption Loan Scheme have urged Rishi Sunak to increase the guarantee
Bank of England governor Andrew Bailey has been among those to suggest this may make banks more willing to provide these loans to firms.
Having said he is ‘not persuaded’ by this argument earlier this week, Sunak is now drawing up plans to increase the guarantee.
But the potential reforms would only benefit up to 1m of the very smallest ‘micro’ firms, taking out loans of less than £25,000. Businesses yesterday called for a more radical shake-up and said the 100 per cent guarantees should be extended across the board.
Tej Parikh of the Institute of Directors said: ‘Without significant changes soon, [the loan scheme’s] ability to keep companies afloat through this period will be limited.’
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