The government is talking with bank executives about introducing a permanent replacement for Covid-19 government-backed loan schemes.
These loan schemes were introduced during the pandemic to help struggling businesses stay afloat, but the government’s focus this time will be more on helping small businesses to grow.
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Loans to help small business growth
According to the Financial Times, government officials have been talking with bank executives about the viability of a new government-backed loan scheme.
During the coronavirus pandemic, the government created various loan schemes to help small businesses access cash. As the schemes were guaranteed by the government, businesses didn’t have to pass commercial lending’s more stringent eligibility criteria.
Whereas those loan schemes (including Bounce Back Loans and Coronavirus Business Interruption Loans) were designed to help businesses survive, any new scheme “would be on supporting growth in UK businesses, including those in “levelling-up” areas of the North,” according to the Financial Times.
A new scheme would therefore allow small businesses otherwise locked out of commercial lending to access finance at affordable terms.
The Financial Times says that the scheme would work alongside commercial lending and the government is currently discussing:
- the level to set the guarantee
- whether personal guarantees are needed
- what businesses should be eligible
A government official told the Financial Times that no decision has been made about progressing with a new scheme, but said there's an "acceptance" that one is needed as relief against future disruptive events.
What other support can small businesses access?
It may be some time before we see such a government-backed loan scheme. The previous schemes have been criticised as being open to fraud, so the government will want to get the application process right.
What’s more, the Recovery Loan Scheme is still open – it doesn’t close until 30 June 2022.
Have a look at our guide to small business grants for money you don’t have to pay back.
Our Business Boost cash prize will also be back this year – in 2021 we gave away £25,000 to help our winner grow their business.
Read more about Business Boost and sign up to be one of the first to know when our grant opens again.
Would you use a government-backed loan scheme in the future? Let us know in the comments below.
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