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The Emergency Business Loans Scheme Extended Due to New Lockdown

As the nation comes to terms with the new lockdown restrictions that will be in place for a month from 5 November, the Treasury has announced an extension to the emergency business loan scheme. What does this mean and who will benefit from it?

What Does This Involve?

The scheme allows businesses to take out various loans, such as bounce back loans and coronavirus business interruption loans. It was due to end on 30 November, but the deadline for applications has been extended until early 2021.

Chancellor Rishi Sunak confirmed in a tweet that the deadline has been “extended until 31 January 2021”. These loans are designed to try and keep businesses afloat during the lockdown, with many of them having to close, or pay collection agency fees to survive, as authorities try to stop infection rates from rising further.

Small businesses that have taken out a bounce back loan already can top it up now at the same 2.5% interest rate as before. The scheme goes up to £50,000 and is backed 100% by the government. A company that didn’t borrow the maximum originally can now top up their loan, to a limit of 25% their turnover, up to that £50,000 limit.

It is thought that many companies who took out the original loan will need to revise their borrowing in light of the second lockdown starting this week. To date, £40 billion has been distributed to 1.3 million British businesses under the bounce back scheme. Firms can send in their new application from next week.

Other Changes

The government has added more financial aid for workers, to help get them through the second period of tough restrictions. The furlough scheme was due to end at the start of November, but will now continue through to 2 December.

Prime Minister Boris Johnson confirmed that it will be paid at 80% of the worker’s wages to a maximum of £2,500, for the hours they don’t work. This could, once again, prove crucial for certain sectors of the economy.

Among those expected to be most affected by the new rules is the hard-pressed hospitality sector. Non-essential retail, pubs, cafes and restaurants are all expected to suffer in the next month as they are forced to close. In the case of restaurants, they can offer only takeaway options.

Once the furlough extension is over, the country will revert to the job support scheme, which had been delayed by a month but will pay two-thirds of wages for unworked hours once it finally starts up.

The self-employed will also receive some extra help in this month of tougher restrictions. In fact, the government will give them double the amount of financial support by increasing the self-employment income support scheme from 40% of the average profits earned up to 80% during November.

Anyone in this category can now apply for more help from mid-November, rather than having to wait until December as was originally going to be the case.