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The Chancellor’s guarantee needs to happen right now

The fact that the Chancellor, Rishi Sunak, is now considering offering a 100% guarantee on loans up to £25,000 to small businesses is welcome but it really needs to be extended right now, says Milan Pandya.

Many Businesses believe that the 80% Government guarantee has been one of the biggest barriers in encouraging the banks to provide the much-needed funds.

The Government also needs to widen the proposal to bring more businesses into the scope, so it extends to medium and large businesses that are also desperate for funds to manage their cash flow. To give some perspective, to date, the average Coronavirus Business Interruption Loan Scheme loan is £185,000.

After a slow start, it is clear that the banks have increased the momentum of loan application approvals. However, even greater effort is needed during this time critical stage to ensure that otherwise viable businesses are not collapsing.

As well as extending the guarantee, the financial regulatory bodies need to relax the compliance for COVID-19 loans so that businesses can receive quicker decisions and hopefully access to much needed cash. One practical point could be to devolve the decision on lending, perhaps within certain parameters, to relationship managers.

Contact us

If you would like to discuss any of the above or have other queries about how you can make the right decisions for the future of your business and your income, please contact your usual Blick Rothenberg contact or Milan Pandya.

You can also visit our Coronavirus – Practical Guidance for businesses today Hub for our latest updates and insights.