The new ‘Bounce Back Loans’ – available from 9am on Monday 4 May – will make the money available for businesses just days after applying, with no fees or interest to pay for the first 12 months. The Government will guarantee 100% of the loan.
Ninety-six per cent of the UK’s 7,400 food and drink manufacturing businesses are small and medium-sized enterprises (SMEs), and these can borrow between £2,000 and £50,000. According to Chancellor of the Exchequer Rishi Sunak, the loans will be easy to apply for through a short, standardised online application.
Sunak said the loan scheme would help ensure businesses got the finance they needed quickly to help survive the ongoing COVID-19 crisis.
“This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses,” he added.
Eligible businesses must be based in the UK, have been negatively affected by the coronavirus and had not been “undertaking in difficulty” on 31 December 2019.
Companies that have already claimed under the Coronavirus Business Interruption Loan Scheme are also unable to apply for a Bounce Back Loan.
Business secretary Alok Sharma added: “Our small businesses are vital in ensuring our communities thrive and will be crucial in creating jobs and securing economic growth as we recover.
“This rapid loan scheme offers additional protection, so small companies across the country can get access to the finance they need immediately, as part of the unprecedented package of support we have put in place.”
SME representatives have come out in support of the Government’s new loan scheme. Federation of Small Businesses national chairman Mike Cherry said the loans were crucial to enable thousands of businesses to get back on their feet and save millions of jobs.
‘Listening to businesses’ needs’
“We are pleased to see the Chancellor and the business secretary listening to the needs of small businesses, and we will continue to work with them to make sure small firms and the jobs they provide are protected throughout this public health challenge and that small firms are at the forefront of leading the recovery,” Cherry added.
News of this latest wave of support from the Chancellor’s office comes as SMEs called for greater and faster financial aid from the Government, as they confronted plummeting sales, production volumes and jobs cuts in the wake of the coronavirus outbreak.
The South West Manufacturing Advisory Service’s (SWMAS’) most recent ‘Manufacturing Barometer’ – which surveyed 600 firms across England – found that nine in 10 respondents predicted a decline in production volumes, while 85% expected sales to drop in the next six months.
The report also found that 55% of businesses believed they would need to cut jobs between now and October, despite the business grants on offer and the furloughing scheme designed to boost employee retention.
Effects of the lockdown
SWMAS managing director Simon Howes noted the impact lockdown measures had had on small manufacturers. These were businesses that often could not work remotely, relying on physical interaction with machinery and parts, he noted.
“Current restrictions and the ongoing lockdown measures mean that capacity is dramatically reduced and, therefore, the majority of businesses are reporting an unprecedented fall in production volumes,” said Howes.
“Top of the support wish list for SME manufacturers is financial assistance and for Government to go ‘faster and further’. While the existing package of measures has been welcomed, there remains a pressing need for a deeper level of sector-specific advice and support.”
Meanwhile, food manufacturers need to start planning for the future after lockdown and the end of the furlough scheme, a leading employment lawyer has advised.