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Sunday, September 20, 2020

Sunak offers new lifelines for companies affected by Covid

The Treasury is considering ways to make it easier for businesses to access coronavirus support loans, in anticipation of the Chancellor’s plans to create “jobs, jobs, jobs” in an attempt. to revive the economy.

Treasury and British Business Bank officials are reviewing access to state-guaranteed loan systems after the European Commission loosened state aid rules last week that blocked the life lines of some UK businesses Kingdom.

A Treasury spokesman confirmed that “the implications of this are being considered [EC’s] loan program amendment “and that the EC change was” an important step in ensuring that all viable businesses get the help they need. “Treasury sources said that UK businesses are likely United rejected for emergency aid in the context of EU financial difficulty tests may reapply if the loan systems were modified.

The UK was forced to adopt so-called “financial difficulty” tests under EU state aid rules, which blocked access to loans by otherwise solid companies, such as start-ups, who were in loss because they have invested heavily in growth, or have complex structures.

Last week, the Commission published the change to the so-called “temporary framework” for all small and micro-enterprises, opening the door to changes to the UK loan guarantee schemes.

The previous rules “seemed to disproportionately affect UK aid schemes,” according to Allie Renison, head of Europe and trade policy at the Institute of Directors, who had sent numerous examples of British businesses to the Commission denied help.

He added: “Testing firms in difficulty has been a critical point for a number of firms, blocking them from much needed funding. We are looking forward to receiving further information that allows companies to access the support they need. “

Chris Wilford, head of financial services policy for the Confederation of British Industry, said that “these barriers to eligibility were a real stumbling block for many companies across the UK during the crisis.”

He added: “They have had a real impact on the capacity of some high-growth and larger companies with more complex structures that are able to access the schemes.”

However, he warned that it is not yet clear how the changes could help those mid-level companies that may not yet comply with these rules, adding: “Many of these are important regional and key employers for our recovery.”

More than 1 million companies have lent £ 30 billion under the rebound loan scheme, which has provided loans of up to £ 50,000 which are supported by the taxpayer up to 100%. It was introduced after companies had difficulty accessing aid under a similar scheme that offered an 80% guarantee.

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