LONDON, April 3 ― British finance minister Rishi Sunak will today address a gap in its support for businesses trying to survive the seismic economic hit from the coronavirus outbreak, by allowing medium-sized companies access to government-backed loans.

The move comes on the back of warnings that many businesses risk collapse soon ― up to 18 per cent of all small- and medium-sized enterprises (SMEs), according to the Corporate Finance Network of accountants.

Under the new loan scheme, companies with an annual turnover of between £45 million (RM243 million) and £500 million can apply for loans of up to £25 million from banks with an 80 per cent government guarantee, the finance ministry said.

Previously such firms would have fallen between the two government support schemes already announced, which target very large businesses and small companies.

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It will form part of a £330 billion package of loan guarantees for companies announced by Sunak last month.

With gauges of business activity slumping to record low levels, economists expect Britain's economy will contract by around 10 per cent or more in the second quarter but many reckon a sharp recovery is possible once the virus outbreak peaks and fades.

“We have ... listened to the concerns of some larger businesses affected by Covid-19 and are announcing new support so they can benefit too,” said Sunak, who will meet the chief executives of British banks next week.

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Sunak and Bank of England Governor Andrew Bailey wrote to banks last month to say they needed to show flexibility and maintain a willingness to extend lending despite the difficult economic outlook.

The new scheme for larger medium-sized companies will be offered at commercial rates of interest and more details will be announced later this month, the finance ministry said.

“Improvements to the Coronavirus Business Interruption Loan scheme will help firms get access to cash more quickly, and the announcement of a new loan scheme for mid-sized companies closes a significant gap in existing support,” Adam Marshall, director general of the British Chambers of Commerce, said.

The government will also relax the criteria for small companies trying to access loans from the existing scheme, so that those which cannot secure regular commercial financing will now be eligible.

The small companies support programme launched last week now has £90 million of lending approved for nearly 1,000 firms, the finance ministry said.

Yesterday the Federation of Small Businesses (FSB) complained of a “nightmarish” experience for business owners that have already tried to seek help from lenders.

The finance ministry said it will ban lenders from requesting personal guarantees for loans under 250,000 pounds ― one of the FSB's demands ― and will make operational changes to accelerate approvals.

Financial support for big businesses is handled by the Bank of England's Covid Commercial Financing Facility, which stood at £1.9 billion as of Wednesday.

The finance ministry said a further £1.6 billion from this programme would be sent to companies on Monday.

The BoE also announced yesterday that it will double the size of its corporate bond purchases to £20 billion. ― Reuters