The government has launched its microbusiness Bounce Back Loans scheme with a higher than expected £50,000 limit and a 100 per cent guarantee.
- Businesses will be able to borrow between £2,000 and £50,000 and access the cash within days
- Loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form
The microbusiness Bounce Back Loans scheme is capped at 25 per cent of turnover and promises a streamlined application process.
Treasury says that the new microbusiness loan scheme will open next Monday, May 4 and will deliver cash to successful applicants within 24 hours.
Rishi Sunak, the chancellor, said: “Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.”
Mike Cherry, national chairman of the Federation of Small Businesses, said: “To date, the existing interruption loan scheme has not been working for the small firms that make-up 99% of our business community.
“The decision by the chancellor to listen to our recommendation for a 100 per cent guarantee on smaller loans, alongside the creation of a new fast-track system for those applying for them, will give hope to thousands.”
Emma Jones, founder, small business support network Enterprise Nation, said: “These new ‘bounce-back loans’ will close one of the gaps facing micro firms. The chancellor is correct that this group are less keen and less able to take on debt under normal circumstances – but may now feel slightly more confident that this bridging finance now exists.
“The big question now is whether the banks can actually make this work and get those loans out of the door in 24 hours. The other question is over whether they will be affordable in the long run.”