Chancellor Rishi Sunak has laid out a dramatic £330 billion finance plan to keep businesses afloat as they battle the coronavirus pandemic.
The move – announced 24 hours after Boris Johnson asked people to stay at home and avoid pubs and clubs – is designed to avert business failures and save jobs across sectors damaged by the outbreak.
Hospitality remains one of the sectors hardest hit, with the prime minister’s request yesterday – which stopped short of actually ordering people to keep out of restaurants – leaving the industry enraged due to the insurance implications.
A short while ago, Chancellor Sunak said: “For those venues which do have a policy that covers pandemics – the government action is sufficient to allow them to make claims.”
For the smaller businesses in the sector which don’t have insurance he said the government will provide cash grants of £25,000 per business “to help bridge through this period”.
Loans will also be made available to help businesses through the tough times. “Any business which needs access to cash to pay their rent, salaries, suppliers or purchase stock, will be able to access a government-backed loan on attractive terms,” he promised.
“And if demand is greater than the initial £330 billion I am making available today, I will go further and provide as much capacity as required.”
He detailed that the support will be delivered through two main schemes. For larger firms, a lending facility has been agreed with the governor of the Bank of England to provide what Sunak described as “low cost, easily accessible commercial paper”.
While for small and medium sized businesses, the government is extending the business interruption loan scheme previously announced in the budget to prove loans of up to £5m, increased from £1.2m, with no interest due for the first six months.
Mr Sunak also said companies in the sector will receive a “business rates holiday” of up to 12 months to alleviate the pressure on cash flow and ensure firms can pay staff.
The measures will be introduced by the start of next week, with more support to be announced later this week, he said.
FEJ will continue to follow developments and provide further updates.