(Bloomberg) – Chancellor of the Treasury, Rishi Sunak, is about to unveil a state-backed lending program to help companies in the UK recover from the economic devastation caused by the coronavirus pandemic, said a person familiar with the plan.
The new loans are expected to be 80% backed by the government, with interest rates limited to around 15%, according to the person, who asked not to be named to discuss measures to be announced in next week’s budget. The terms are similar to those of existing state-supported lending programs.
The plan will replace Coronavirus Business Interruption Loans, its counterpart for large companies, CLBILS, and the state-backed Bounce Back Loans, which lent £ 73 billion ($ 102 billion) to struggling companies. Sunak delivers the UK budget on March 3.
The Treasury said in December that it was working on a successor to current lending programs. He was eager to replace recovery loans in particular, amid warnings that they are susceptible to fraud. The House of Commons Public Accounts Committee said in December that taxpayers could be subject to about £ 26 billion in loans that may never be repaid because of fraud or because companies cannot pay for it.
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