Nyrada Inc (ASX : NYR) Invest - Nest 2020

The British government has assured the banks in the country that “Bounce Back” crisis loan scheme announced by the government will have full government backing and that banks will be covered against any fraud or bad loans. Since the announcement of the loan facility by the government two days back, where it was stated that business loans upto £50,000 would be given to small and medium-sized businesses without much hassle. The loans which could be applied online would be disbursed within a day and would not be subjected to much scrutiny that banks usually undertake before disbursing any loans. This had worried many bankers as the risk level on such loans would be considerably high. This is the second such stimulus initiative that has been taken by the British government in the past two months after the Coronavirus Business Interruption Loan Scheme (CBILS), which was meant for large businesses to obtain loan from the banks with guarantees from the Bank of England. There have been some problems though that had cropped up in disbursement of these loans which were addressed by the government promptly, the current assurance by the government is another endeavour in that regard. The loan scheme is set to go online from Monday the 4^th of May.

After careful consideration of the progress of the present schemes that had been rolled out by the government post the advent of the pandemic in the country, the government thought it was prudent to come out with filler scheme which would bridge the gaps that have been left open. In deciding that it will underwrite loans for small businesses up to £50,000 who for various reasons have been unable to avail of the benefits from the government's Coronavirus Business Interruption Loan Scheme (CBILS) the government filled the expenditure gap, the small businesses were facing after furloughing majority of their employees. While the CBILS facility was providing such a cover to the large businesses, no such cover had been given to the small businesses, who in fact were more in need for such a facility. Other than that there were many businesses who were unable to avail of the benefits of the CIBILS scheme because of stringent terms and conditions that the banks in the country were following before sanctioning these loans, in addition to the inordinate delay in their processing time. The Chancellor of the Exchequer Rishi Sunak, when he was making the announcement about the new loan facility in the House of Commons, categorically stressed upon the point that the new Bounce back loan scheme is meant to provide strength to the Coronavirus Business Interruption Loan Scheme which is already under implementation after its announcement last month. This scheme unlike its larger cousin is hassle-free and can be availed by applying online and allows to borrow a suitable amount from £2000 to £50,000 with no interest to be paid in the first year, or any repayments to be asked in the first year. Last week when the proposal was still under consideration the chancellor had stated that a 100 per cent state-guaranteed small business loan scheme of up to £25,000 was under consideration, but when the announcement was made this week, the maximum loan amount size was increased to £50,000.

The government had already anticipated that problems would arise with the Coronavirus Business Interruption Loan Scheme when it was announced last month. It was criticized by some as not properly planned, but the government still went ahead with it, as it was the largest scheme rolled out by the government that will provide a major boost in the efforts to provide support to the large and medium businesses in the country to deal with the business slowdown that had been induced by the lockdown. The Coronavirus Business Interruption Loan Scheme (CBILS) under which the Bank of England would guarantee loans taken by companies in the country up to a total of £350 billion, is being implemented through the banking system, which is bound by the customer credit act, and have to strictly adhere it. However, the loans were needed by businesses urgently to pay salaries and other important expenditures, while the businesses struggled to keep themselves afloat and navigate through the crisis. Thus the implementation of the scheme within the customer credit act has been the bone of contention between the government and the banks, which the present assurance of the government seeks to iron out. Moreover, many businesses have also been complaining that the banks have been slow in the implementation of the governments scheme which was taking a toll on the industry. After the launch of the Coronavirus Business Interruption Loan Scheme, the banks started to take a long time in scrutinizing the applications and also on many occasions started to refuse applications when the businesses needed cash at the most urgently. There were also many businesses who genuinely did not qualify under the stringent loan regulations but were large businesses employing many people. Taking all the above reasons into consideration and also listening to the problems of various industry bodies and unions, the government decided to bring in this new scheme to fill the gaps.

Since the very beginning, when the very first stimulus scheme was announced by the government, it had given priority to one thing in particular. The government has been taking unprecedented measures so that unemployment in the economy does not increase sharply. In this regard, the government is doing everything it can to help the masses and is also committed to doing more, should the need arise. The government has already received a record number of applications from people who are seeking unemployment benefits and has also assured that it is committed to help these people. It is imperative, however, that for all the efforts being made by the government the pandemic needs to be brought under control at the earliest so that the lockdown in the country is lifted as soon as possible and the losses that are being suffered by the country gets restricted.