Chancellor of the Exchequer Rishi Sunak has unveiled a war chest worth up to £350 billion, designed to save the UK economy and give businesses certainty over the coming months.
Mr Sunak admitted during a Government press conference on the Coronavirus pandemic that the UK had not “faced an economic challenge of this size in the peacetime era.
As more consumers, workers and business owners are forced to self-isolate to shield society’s most vulnerable from the dangers of COVID-19, the Chancellor disclosed a package of financial measures to fight this nationwide “economic emergency”.
Loan guarantees for larger firms
First and foremost, the Chancellor’s package included £330 billion worth of Government-backed loan guarantees available to businesses of all shapes and sizes. A lending facility has been established with the Bank of England, ensuring immediate liquidity for larger firms.
Extension of the business interruption loans scheme
Meanwhile the business interruption loans scheme has been extended for smaller businesses, providing access to loans worth up to £5 million per business, available interest-free for the first six months.
It is hoped that both schemes will be up and running by the beginning of next week, allowing business owners to act fast and provide certainty for their employees and suppliers.
Mr Sunak said: “If demand is greater than the initial £330 billion [for loans] I’m making available today, I will go further and provide as much capacity as required.”
Business rates holidays for retail, leisure and hospitality sectors
Mr Sunak has gone further with those measures by giving the retail, leisure and hospitality sectors a year-long holiday from paying business rates. The smallest firms in these sectors operating within properties with a rateable value of less than £51,000 will also be eligible for cash grants worth up to £25,000, designed to cover the costs of commercial rents.
The Chancellor has also pledged to work closely with business groups to develop an Employment Support Package, aimed at mitigating employment costs for smaller firms and avoiding the need for redundancies.
Cash grants for smallest firms and three-month mortgage holidays
The 700,000-strong army of the UK’s smallest firms are also set to benefit from cash grants worth £10,000.
Meanwhile entrepreneurs and employees alike have been reassured by the Chancellor’s announcement of a three-month postponement on mortgage payments for homeowners in financial difficulty due to the COVID-19 pandemic.
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: “This unprecedented package of loan guarantees, business rates breaks and cash grants marks a hugely welcome step forward.
“The key now is to deliver these measures within the coming days with no hold ups at banks, local authorities or central government.”
Although these initial measures did not go far enough to provide clarity for self-employed professionals and the UK’s gig economy, Mr Sunak went to great lengths to ensure he would be focusing on specific sectors and demographics in the coming days.
“Clearly small employers will need a huge amount of support to keep staff on their books at this hugely difficult time, so it was good to hear the Chancellor pledging to develop an Employment Support Package to help make that possible,” added Mr Cherry.
“We will be working together with the Government to ensure the employment package provides for the self-employed [too].”
Welsh Government reaches out to small firms across Wales
In Wales, the Welsh Government has also committed to a range of measures aimed specifically at small businesses in the country.
The Development Bank of Wales will ramp up its equity and loan funding to otherwise healthy small businesses. Meanwhile the businesses already supported by the development bank will receive a three-month capital repayment holiday.
A new grant scheme has also ring-fenced £100 million to provide liquidity to small businesses in most need.
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