Coronavirus is indeed a health emergency all around the world. But, lockdown across the globe has caused a complete economic meltdown. Therefore, COVID’19 is now both a health and an economic emergency. Governments all around the world are taking bold and tough decisions to make sure that the economy of their country stays afloat.
The United Kingdom has also taken some measures on the economic front, and if you have any queries about your loans or getting new loans, then you must know about these measures.
What have the Financial Regulators planned?
At the beginning of April 2020, the financial regulators announced a plan to freeze loans and credit card payments. This emergency measure is initially imposed for three months with different rules for different types of loans. In normal circumstances, such actions would have taken months to be enforced, but these are desperate times, and they call for desperate measures.
Of course, banks are not so happy because of these new plans, and they are under fire for insisting on personal guarantees on government-backed loans.
What do you need to Know about No Loan Interest Scheme?
Coronavirus recession has forced the UK’s government to come up with a welfare plan for people on a low income. The government has committed to piloting no-interest loans for such people. According to the report of the treasury commission, these no-interest loans will be feasible as the money will be provided either by a central government body or by existing lenders (Both bank and non-bank lenders), with a potentially quicker rollout.
A Quick Guide of UK’s Government Plan for Loans during COVID’19
The plan of the UK’s Government for loans during COVID’19 is aimed at the consumers and renters. Therefore, those who are not benefitting from existing relief measures will be compensated in this plan. According to the official of the Financial Conduct Authority, “given the national emergency, the process is being fast-tracked,” they said.
Here is a quick guide of UK loans during coronavirus crisis:
What will happen to Income Subsidies?
The government plans to provide direct cash grants for self-employed people. It will be worth 80% of the average profits, which is approximately £2,500 a month. Similarly, there are different wage subsidies for different kinds of employees. These subsidies will help the people with lower income stay afloat so that they don’t come between the lines.
Giving Loan Guarantees for Businesses
The devastating impacts of coronavirus on the business sector will last for a long time. Now more than ever, it is the responsibility of the governments to come forward with policies to support businesses. The government of UK is to back £330bn worth of loans with the sole purpose of supporting the markets through a Bank of England scheme for big farms.
Small companies are the backbone of the economy. Therefore, there are loans of up to £5m with no interest for six months for small businesses.
What’s New in Business Rates?
Given the economic crunch, the governments all around the world are going easy on the taxes and trying to compensate their business sector as much as they can. According to the plan released by the UK’s government, taxes levied on commercial premises will be abolished this year. All the retailers, hospitality sector firms, leisure outlets, etc. will not have to pay taxes this year.
What will happen to Cash Grants?
Small and medium-sized businesses will require cash grants to keep themselves running. Therefore, Britain’s 700,000 businesses will be eligible for cash grants of £10,000, according to the govt.’s policy. Small businesses need more concessions to keep themselves afloat. Therefore, small retailers and hospitality firms can get more significant cash grants of £25,000.
What Benefits to expect?
The value of universal credit and the tax credit is to be increased by £1,000 a year in the latest loan plan of the UK’s government to fight the recession amid the coronavirus. The eligibility criteria for these benefits have also been widened so that maximum people can benefit from it.
Will you Get Sick Pay?
In this plan, the statutory sick pay is made available for day one, rather a day four, of the absence of work. However, the ministers are still being criticised for not increasing the level of sick pay above £94.25 a week. But, still, small firms can claim for state refunds on sick pay bills.
Other Small Things
There are other small details of the plan as well. For example, local authorities will get a £500m hardship fund. This fund will be used to provide people with council tax payment relief. Similarly, all the mortgage and holidays are made available for up to three months.
What Are the Banks Told?
The main and the most substantial chunk of this policy of the government is that they have told the banks to keep lending money to businesses. This development is made to ensure that viable companies do not fail during the crisis.
Although, even after it has been made very clear by the government, different media platforms are filled with complaints about restrictions on access to the Business Interruption Loan Scheme introduced by the government to help the economy during the coronavirus crisis.
To make things go smooth and make sure that the policy works, the state-controlled British Business Bank has now opened up the scheme to all the lenders who want to participate. It will help the customers to weather the crisis. Therefore, the government is asking the lenders to come forward in times of crisis and play their part.
The coronavirus crisis has crippled the world. Governments all around the globe need to make robust and bold decisions to ensure that when all this is over, they don’t have another massive crisis to deal with – the economic crisis. The UK’s loan plan during the coronavirus crisis looks promising, and if the officials keep working to make sure the implementation of the plan, then chances are that it might work to save the UK’s economy from a massive fall back. Now that you know the whole plan, check out the category you fall in and get benefitted.