In his budget speech next week, the Chancellor is expected to announce an extension of the Government’s Covid recovery loan scheme – the amount of money that has been spent under which has not yet been published – which was due to end on December 31st. The Times has the story.
The scheme was launched in April as a bridge between the more generous coronavirus loan schemes and more normal credit conditions.
It provides credit worth up to £10 million and comes with an 80% Government guarantee for lenders. Its terms are less generous than previous pandemic loan schemes. Lenders are allowed to ask for personal guarantees from directors on loans over £250,000. Fees must be paid from the start and businesses must show that they would be viable were it not for the pandemic and had been affected adversely by the Covid crisis.
Data has not yet been published on how much money has been lent under the scheme. However, banking sources have said that the volume of loans has been lower than expected. Under three earlier Government-backed lending programmes, including the business interruption loan and bounce back loan schemes, almost £80 billion of loans were issued to help companies through the pandemic.
An industry source said: “The take-up [of the recovery loan scheme] was never really expected to be as big as the other schemes, but it also hasn’t been as big as they had expected.” The source said it would “make sense” to continue to provide an alternative to bank lending for businesses into the new year.
The economy grew by 0.4% in August, which was weaker than economists expected. It contracted for the first time in six months in July. …
A Treasury spokesman said: “We have provided over £79 billion to 1.6 million businesses through our government-backed Covid loans, including the recovery loan scheme, to ensure firms had finance they needed throughout the pandemic.”
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