Coronavirus loans scheme for SME landlords beefed up after criticism

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HM Treasury’s Coronavirus Business Interruption Loans Scheme is to be offered to a much wider range of SME businesses and its lending criteria relaxed, the Chancellor has announced.

Landlords who run their portfolios as small or medium size businesses are to be given more help accessing commercial loans following an announcement by Chancellor Rishi Sunak this morning.

His recently-announced Coronavirus Business Interruption Loans Scheme (CBILS) was criticised after it transpired that the system, which offers SMEs business loans backed by the government through 40 approved lenders, was only open to businesses who aren’t normally eligible for commercial loans.

Lenders were also asking landlords for personal guarantees to back the loans, and in some cases charging very high interest rates.

In answer to this criticism, Sunak has now widened the scheme to include all SME businesses, asked lenders to charge ‘reasonable’ rates of interest and business owners will now only have to offer guarantees to cover 20% of loans under £250,000.

Interest paid

HM Treasury had already prevented lenders from insisting that company owners put up their homes to guarantee loans and instead can offer up other assets, and it will continue to cover the first twelve months of interest and fees.

The changes to CBILS will go live on Monday, 6^th April and, as before, includes loans of up to £5 million.

“We’re pleased that the Chancellor is listening and responding to the real-world concerns posed by firms across the UK who are urgently trying to access financial support,” says Adam Marshall, Director-General, British Chambers of Commerce.

Mike Cherry, Chair of the Federation of Small Businesses, says: “Taking on debt at the current time is a daunting prospect for many small businesses and the self-employed. “We look forward to continuing our constructive engagement with government to ensure that debt can be repaid in an affordable way that allows small businesses to recover from this crisis and to thrive again.”

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