Extra help for businesses seeking emergency loans

The UK government’s emergency coronavirus loans scheme is being overhauled following criticism it is failing to help small and medium-sized companies.

Chancellor Rishi Sunak gives a press conference about the ongoing situation with the coronavirus outbreak inside 10 Downing Street

Changes unveiled yesterday by Chancellor Rishi Sunak will ban harsh terms abeing imposed by banks and make the scheme more accessible.

Research has warned nearly a million small firms could run out of cash in a month despite the emergency help.

The coronavirus loans scheme offers companies up to £5 million interest-free for the first year to shore up their businesses. The government pledged to underwrite 80 per cent of the risk as an incentive for banks to lend to firms in difficulty.

But banks have come under heavy fire for demanding personal guarantees from business owners that could see their assets being seized, while others have imposed high rates once the interest rate-free initial period ends.

Mr Sunak will also extend the loans scheme to cover larger businesses, with the government guaranteeing loans of up to £25m to firms with an annual turnover of between £45mand £500m.