The UK government’s initial response to the coronavirus crisis was largely welcomed by business groups. By promising to support businesses through covering 80% of many workers’ salaries as well as introducing a series of loans and grants for companies, Chancellor Rishi Sunak garnered widespread praise for taking swift and decisive action.  

However, since then the practical difficulties of designing, building, and delivering a completely new economic rescue package have become painfully clear. Many businesses are complaining of excessive bureaucracy, complicated application processes, and ineffective measures that failed to truly support small businesses.  

Now, though, the government is preparing to offer 100% guarantees on loans to up to 1m micro-SMEs. Indeed, Sunak announced on April 27 a new micro-loan scheme for businesses aimed at diverting funds quickly to those in need.  

Under the ‘bounce back loan scheme’, firms will be able to get loans worth up to 25% of turnover, with a maximum payment of £50,000. The government will pay the interest for the first 12 months, he says. And the government will back them 100%. He described them as “bounce back” loans, and he says people will be able to apply from May 4. There will be no forward-looking eligibility test, he said.  

Full details have yet to be published, but small businesses are advised to look out for government announcements and to stay in close touch with their accountants and other advisers.  

News of an extension

The news of an extension of the scheme may reassure some UK SMEs that they will be able to access the huge sums the Chancellor has committed. Many business people have complained that the Coronavirus Business Interruption Loans (CBILs) scheme, aimed at shifting funds out to stricken small businesses quickly, hasn’t delivered on its promise. But Sunak says small businesses applying for the bounce back loans will receive funds within a few days.  

Figures from UK Finance released on April 23 showed British banks had provided more than £2.8 billion in loans to smaller firms through the coronavirus lending scheme. Total lending under CBILS doubled in the week to April 23, increasing by £1.45 billion. The total number of loans approved has increased by more than 120% over the week to more than 16,600, according to the data.  

A few weeks back, the Treasury said it had received more than 130,000 enquires from firms seeking access to the business interruption loan scheme but fewer than 1,000 had been approved. It has since been beefed up, with new data showing that more than 16,600 smaller companies had received almost £3bn of loans under the scheme, which had doubled since last week. 

SMEs are bearing the brunt of the coronavirus crisis, with many having to carefully plan their way through the lockdown. For those interested in getting more support, there is a range of resources available here 

If you need help to navigate your way through the crisis we are here for all your needs, and you can contact us for help in a number of areas, from tax and payroll to accounting and banking