Chancellor sets up Bounce Back loans for smaller firms
28th April 2020
Small and micro businesses are being offered 100% Government-backed rescue loans to support cash starved firms, the Chancellor, Rishi Sunak, and he confirmed that small firms could access the new Bounce Back loans from next week.
The new loan scheme is designed to provide easier access to cash for small companies facing difficulty accessing existing government-backed lending. The Chancellor said businesses would be able to apply for micro-loans worth up to 25% of their turnover, up to £50,000.
The Chancellor’s announcement of a simple micro loan scheme shows that he has listened to the concerns of small businesses who have struggled to access affordable finance during the lockdown.
However, the Federation of Master Builders (FMB) has said that with many small to medium-sized (SME) construction sites still shut, an SME Support Fund that issues grants, instead of loans, is needed to help smaller contractors to get back to business once lockdown ends.
Brian Berry, Chief Executive of the FMB, said: “The Chancellor has listened to local builders’ concerns about cashflow, raised by the FMB, and brought forward a simple loan scheme for viable firms. This marks a positive step when just 4% of builders were able to acquire credit through previous schemes.
“Cashflow is currently builders’ biggest headache because many construction sites remain shut. The combined challenges of accessing scarce materials, working safely in a client’s home, and protecting the health of the construction workforce, has left many firms unable to continue bringing income in.
“An SME Support Fund in England, and Northern Ireland, similar to the ones in Scotland and Wales, is needed to issue grants and ensure that these firms can hit the ground running post-lockdown. Builders, and the construction industry, will thrive if they are able to reinvest their profits back into the economy, rather than paying back a loan.”
Source: Spector magazine