Chancellor Rishi Sunak provides more 'time' to 1.5 small companies to repay Covid-19 loans
The UK government has said it will give more '' time '' to small firms to repay their loans. This new initiative becomes necessary to prolong the survival of these firms.
Small firms to get more time to repay loans
This new policy includes letting them stretch the time of their loans to within five to eleven years under this new'' pay-as-you-grow policy. The chancellor is under immense pressure to do something quickly because the extended lockdown will affect businesses struggling for survival.
Figures put it that £44 billion has been lent to 1.5 million small and medium companies based on the Bounceback Loan initiative which provides loans to businesses up to £55,000. Under this scheme, they get interest-free loans for 12 months. However, it is expected that they will start paying back by June with improved economic recovery.
The policy allows flexible loans and a longer time
The new policy mentioned last week indicates businesses will have the chance to extend the length of their loans, and they can suspend repayments for up to five months. Mr. Sunak said that this arrangement allows flexible lenders and repayment structures as the UK economy continues to recover.
The chancellor said
'' Many businesses continue to struggle for survival because of lockdowns and the government will try to find ways to make the citizens better. We promise to give support to struggling firms in these tough times. ''
Financial institutions that are regulating the loans will have the duty to contact the loaners and explain what these initiatives mean for them. The UK finance industry which includes banks and other monetary institutions has insisted it will back businesses, irrespective of their size to cope with this crisis.
New research by the Audit office has opined that more than 55% of loans collected will likely not be paid as businesses survive under harsh conditions.