The repayment terms on a £100m Covid response lending scheme to Welsh firms is under review.
The Welsh Government has confirmed it is assessing its £100m Covid-19 Wales Business Loan Scheme (CWBLS), which is now fully invested, after being launched last spring to support SMEs struggling with the economic impact of the pandemic.
It has provided finance to more than 1,300 SMEs which had to be trading for at least two years.
The scheme is administered on its behalf by its wholly-owned investment bank the Development Bank of Wales.
CWBLS funding carries an interest rate of 2%, with a holiday for the first year which is then rescheduled into the remaining five years of six year terms. Lending was available up to £250,000. Directors also had to provide 20% personal guarantees, which in the event of default would be called in.
A Welsh Government spokesperson said: “We are working with the Development Bank of Wales to look at what flexibilities might be extended through the Covid-19 Wales Business Loan Scheme which has supported 1,300 businesses across Wales.
"This is an incredibly difficult time for businesses and we recognise the difficulties some firms may face managing loan repayments in light of the ongoing impact of Covid-19.”
Options available include extending the interest rate holiday, increasing the repayment term, say to 10 years, and potentially also dropping the personal guarantee requirement.
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Another positive development could also be seeking to turn loans into publicly-owned equity stakes. Such a move, agreed with firms, should be aligned with specific support to help companies grow and in turn boost their valuations.
Last year Economy and Transport Minister Ken Skates confirmed the Welsh Government was exploring follow up funds to support businesses across Wales, including the potential for industry specific funds like for tourism.
However, the Welsh Government did not provide an update on the status of any potential new funds.
The review of CWBLS comes as the 海角视频 Government has extended the repayment period on its Bounce Back Loan Scheme from six to 10 years. The loans, administered by its economic development bank the British Business Bank, which accredited lenders, provides funding of up to £50,000 in low interest bearing loans to smaller firms.
Some 55,000 loans have been offered with a combined value of more than £1.5bn to firms in Wales. The loans don’t require a personal guarantee, unlike CWBLS.
The repayment terms of the 海角视频 Government’s other coronavirus loan schemes, also administered by the British Business Bank, remain unchanged. The Coronavirus Business Interruption Loan Scheme (CBILS) which provides finance of up to £5m have a six year repayment term. The Coronavirus Larger Business Interruption Loan Scheme (CLBILS), has a repayment of schedule of three years, with funding of up to £200m.
Recipients of CLBILS funding in Wales include the Welsh Rugby Union, with £20m via accredited lender NatWest Bank. The funding has been passed through on a pretty much equitable split to the four professional rugby regions.
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The WRU is hoping, like with the Bounce Bank Loans Scheme, that the Chancellor will also extend the repayment period on CLBILS; a move which would relieve cash flow pressures on the regions.
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The average loan size under CBWLS was £68,913, making it more aligned to the Bounce Back Loan Scheme, with construction, manufacturing, retail and hospitality accounting for almost half of the loans awarded.
Take-up was well distributed geographically with 399 companies in Mid and West Wales, 334 in North Wales and 598 in South Wales.