LONDON (Reuters) – UK Finance Minister Rishi Sunak to offer 100% loan guarantees to UK’s smaller businesses after sustained pressure from Tory lawmakers and the Bank of England, the Financial Times reported .
Sunak “weighed in” whether to offer full state support for loans of up to 25,000 pounds ($ 30,800) to a million small businesses, usually with a handful of employees, to help them survive the coronavirus crisis, the FT said.
A spokesperson for the Ministry of Finance declined to comment.
Sunak said on Tuesday he was still “not convinced” that the government should offer a 100% guarantee to banks that lend to small businesses affected by the coronavirus.
But the FT said a new loan scheme could be launched alongside Britain’s £ 330bn emergency program offering loans of up to £ 5m, with 80% state guarantees, to small and medium enterprises.
This program got off to a slow start, with many companies saying they had difficulty convincing banks to approve their loans.
Data released Thursday showed banks had made 2.8 billion pounds ($ 3.5 billion) in loans, almost double a week earlier.
Last week, Bank of England Governor Andrew Bailey urged banks to speed up application processing and suggested that 100% state guarantees for smaller loans could break a backlog of applications.
The Confederation of British Industry on Thursday urged the government to ease lending terms on government-guaranteed loans to small businesses to prevent them from going bankrupt.
The CBI also said the loans should be repayable over 10 years, rather than a maximum of six, for companies facing high fixed costs and low profit margins.
Reporting by Guy Faulconbridge and William Schomberg; edited by Michael Holden