In a significant move to support Britain’s small businesses, Chancellor Jeremy Hunt is set to announce an extension of the Covid recovery loan programme by two years in the upcoming Budget on Wednesday.
This extension comes as a relief to many SMEs facing uncertainty and financial challenges due to the ongoing impacts of the Covid-19 pandemic.
Initially founded in 2021 and extended in 2022, the scheme involves the government guaranteeing 70% of loans up to £2 million for companies with turnovers of less than £45 million. With the proposed extension, the programme will now continue until 2026, providing businesses with additional time and support to navigate the economic recovery process.
Business groups, including the Federation of Small Businesses (FSB), have advocated for delaying the closure of the scheme, citing concerns about a potential cliff-edge scenario for SMEs once the programme ends in July 2024. The FSB emphasised the importance of the loan scheme in facilitating investment and growth for small firms and highlighted its positive impact on the UK’s funding ecosystem.
However, critics have raised concerns about the potential distortion of the funding environment due to the extended loan programme. Despite these criticisms, the move is seen as a necessary step to bolster the resilience of small businesses and sustain economic recovery efforts.
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Hunt set to extend Covid recovery loans by two years