LONDON (Reuters) – British finance minister Rishi Sunak is preparing to offer 100%guarantees on loans to Britain’s smallest businesses after sustained pressure from Conservative lawmakers and the Bank of England, the Financial Times reported.
FILE PHOTO: Britain’s Chancellor of the Exchequer Rishi Sunak attends a news conference on the ongoing situation with the coronavirus disease (COVID-19) in London, Britain March 20, 2020. Julian Simmonds/Pool via REUTERS/File Photo
Sunak was “weighing up” whether to offer full state backing to loans of up to 25,000 pounds ($30,800) for as many as 1 million small firms, typically with a handful of staff, to help them survive the coronavirus crisis, the FT said.
A finance ministry spokesman declined to comment.
Sunak said on Tuesday that he was still “not persuaded” that the government should offer a 100% guarantee to banks which lend to small businesses hit by the coronavirus.
But the FT said a new loans programme could be launched alongside Britain’s emergency 330 billion-pound scheme offering loans of up to 5 million pounds, with state guarantees of 80%, to small and medium-sized companies.
That programme got off to a slow start with many companies saying they were struggling to get banks to approve their loans.
Data published on Thursday showed banks had provided 2.8 billion pounds ($3.5 billion) in loans, almost doubling from a week earlier.
Last week, Bank of England Governor Andrew Bailey urged banks to speed up their handling of applications and suggested 100% state guarantees for the smallest loans might break a backlog in applications.
The Confederation of British Industry urged the government n Thursday to relax lending terms for government-backed loans to smaller businesses to stop them going bust.
The CBI also said loans should be repayable over 10 years, rather than a maximum six, for businesses that face high fixed costs and low profit margins.
($1 = 0.8106 pounds)
Reporting by Guy Faulconbridge and William Schomberg; editing by Michael Holden