WHAT DOES THE SMALL BUSINESS LOAN SCHEME MEAN FOR NEW BUSINESSES?
Small fashion companies have a new reason to smile, as the government announced a new loan scheme which will allow them to find their feet a little easier after lockdown eases.
Announced on Monday, small businesses can now benefit from government-backed loans between £2,000 and £50,000. Access to cash could come through within days and they will be interest free for the first year.
The Chancellor of the Exchequer, Rishi Sunak, announced this new Bounce Back Loans scheme in order to settle the nerves of many small business owners who have had their futures cast into obscurity following seemingly never-ending closures.
Small fashion companies which need cash injections to continue operating could get this money in days, along side other measures introduced by the government over the course of their Covid-19 response, like its furlough incentive.
No repayment will be due for the first 12 months and the government will provide the network of accredited lenders with a 100% guarantee for the loan, paying its fees and interest for the same period. “The Chancellor’s new 100% guaranteed loan scheme for small businesses is transformational,” said Dame Carolyn Fairbairn, CBI Director-General. “Sole traders, micro-firms and entrepreneurs will now have a simple route to fast finance to stay afloat, without red tape or time-consuming checks.”The scheme has been designed to complement the £6 billion awarded in business grants and the generous tax deferrals which are keeping millions of jobs safe and supporting thousands of companies.
This financial aid comes on the heels of reports that nearly 20 per cent of SMEs were unlikely to make it through April. These figures came from a network of accountants who reported that up to one million firms in the UK may have to close, particularly as many had been refused emergency loans.Though some have gotten creative in their efforts to stay afloat, repurposing their manufacturing towards PPE and hand sanitiser, this cash injection will allow some small fashion companies to take a small breath of air. This support can be accessed through a short, simple and standardised online form, throwing a lifeline to companies on the brink. Launching May 4th, small fashion companies can hope to focus on the long term a little more.