THE Government's new micro loan scheme will provide a 100 per cent government-backed guarantee on loans worth up to £50,000 (capped at 25 per cent of turnover) and a streamlined application process.

This is great news for small businesses. It also delivers against recommendations made by the Federation of Small Businesses, in light of our concerns about how the Coronavirus Business Interruption Loan Scheme (CBILS) was working in practice.

CBILS was proving to be bureaucratic and focused on much larger loan amounts – on average £170,000. Neither of these characteristics were helpful to small businesses. However, this new scheme provides the certainty, loan size and a fast-track application system that could be a real lifeline to small businesses in these trying times.

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The headline terms will certainly be welcomed by the sole traders and micro businesses that make-up 95 per cent of the small businesses community. Those terms include a commitment for the new fast-track system to be established by next Monday and for money to be delivered 24 hours after a successful application has been made. The removal of the need to provide forecasts also marks an important step forward. Small firms cannot be expected to predict the future in the current climate.

We want all those who have been declined a CBILS loan to be contacted with the offer to re-apply via this new scheme. Those mid-way through a standard CBILS application should also be given the option to change tack.

Time remains of the essence. Many small businesses have had to pay March and April’s payroll, on top of other overheads, with little or no revenue coming in at all.

If delivered to plan, this new scheme could provide much needed access to working capital. In so doing, it will provide a timely lifeline to small businesses and help to secure their future beyond the immediate crisis.