You know when you are in a restaurant, a waiter places your plate in front of you and says, "Be careful, it's very hot" and you then just have to check they are telling the truth? Well, the 'ouch!' you feel is how hot off the press this bulletin is today.
About ten minutes ago ministers stepped over three empty party sevens in the foyer of No 10 and emerged to announce that the Government will launch a £3 billion-a-year loan guarantee scheme to replace a broad set of emergency financial support measures brought in to help businesses during the pandemic. That's good, as we know how successful and targeted the last versions of Government backed loans were and most of us will be paying for others' fraud until we die (except those who have spent their Bounceback loans and CBILs on being cryogenically frozen and coming back once the cost of living squeeze is over to spend their thousands).
It is something of a relief to hear that the new loans will come with tighter requirements for borrowers, compared to the easily accessible funds available during the Covid crisis. We hear that you now have to be able to sign your name and not have been disqualified as a director in the last three months.
The existing recovery loan scheme ends on 30 June and it seemed for a while as if small businesses would be left scratching their heads, or a card bought in a supermarket, for more funding at what is increasingly realised as being 'a very hard time'. The ink is still wet on the outline of the new scheme, but it seems likely that the Government guarantee is likely to be set at 70 per cent of the value of the loan, according to people with knowledge of the plan and who owe Billy money.
Unlike comparable support packages launched during the pandemic, the policy will set a cap of £3 billion the amount banks are able to lend through the scheme in a single year and lenders are expected to offer loan guarantees of up to £2 million to businesses under the plans.
Everyone is looking at banks and how close their hands are to the lever that will pull up the drawbridge on business lending. Anyone who runs an SME will tell you that, short of tears or threats, you have to be Elon Musk's sweet-natured niece to be offered business finance at the moment. This new scheme may prove to be the lifeline that many need.
More on this next week when the story breaks.
