The fact that the chancellor, Rishi Sunak, is now considering offering a 100% guarantee on loans up to £25,000 to small businesses is welcome, but it really needs to be extended right now, said the leading tax and advisory firm Blick Rothenberg.
Milan Pandya, a business advisory partner at the firm, said: ‘Many businesses believe that the 80% government guarantee has been one of the biggest barriers in encouraging the banks to provide the much needed funds.
He added: ‘The government also needs to widen the proposal to bring more businesses into the scope, so it extends to medium and large businesses that are also desperate for funds to manage their cash flow. To give some perspective, to date, the average CBILS loan is £185,000.
‘After a slow start it is clear that the banks have increased the momentum of loan application approvals however, even greater effort is needed during this time critical stage to ensure that otherwise viable businesses are not collapsing.
He concluded that: ‘As well as extending the guarantee, the financial regulatory bodies need to relax the compliance for COVID-19 loans so that businesses can receive quicker decisions and hopefully access to much needed cash. One practical point could be to devolve the decision on lending, perhaps within certain parameters, to relationship managers.’
Image credit: Freepik