LONDON (Reuters) – Britain’s Finance Minister Rishi Sunak on Friday announced updates to a scheme designed to get banks to help businesses hit by the coronavirus.
Here are the main points:
WHO IS ELIGIBLE?
* Initially only firms with turnover up to 45 million pounds ($55 million), who can apply for loans of up to 5 million pounds
* Must be able to show the business has been impacted by the coronavirus crisis
* Must have a business proposition that would be viable were it not for the coronavirus
* Under expansion of the scheme announced on Friday, firms with turnover of 45 million pounds to 500 million pounds can also apply for loans of up to 25 million pounds
* Bigger companies covered under separate Covid Commercial Financing Facility, which stood at 1.9 billion pounds as of Wednesday
* 40 approved lenders in the scheme, mainly big banks
* Non-bank lenders, smaller firms lobbying to join scheme
* Government guarantees 80% of the loan
* Guarantee kicks in only after lender has exhausted other forms of recovering the debt
* Government pays interest and fees for first 12 months
* Following criticism lenders have removed the need for personal guarantees on loans of up to 250,000 pounds.
* Some borrowers say process is bureaucratic, could not get through on bank phone lines overwhelmed in early days of scheme
* Borrowers complain of onerous demands for personal guarantees and other forms of security
* Only 1,250 loans made so far out of over 130,000 enquiries
* Banks worried about being forced to lend to firms that will go bust anyway
($1 = 0.8144 pounds)