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Finance minister rejects 100% guarantee for small business loans

Chancellor Rishi Sunak speaks during a daily news conference on the coronavirus disease (COVID-19) outbreak, at 10 Downing Street in London, Britain April 20, 2020. Pippa Fowles/10 Downing Street/Handout via REUTERS

LONDON (Reuters) - British finance minister Rishi Sunak said on Tuesday that he was still not persuaded that the government should offer a 100% guarantee to banks which lend to small businesses hit by the coronavirus.

The Bank of England has said a 100% guarantee would speed up the issuance of loans to small firms facing a cashflow crisis, by removing the need for banks to conduct credit checks for the 20% of lending they must underwrite under the current scheme.

Sunak said banks had approved 12,000 loans under the Coronavirus Business Interruption Loan Scheme, up from just over 6,000 as of April 14.

“I am not persuaded that moving to a 100% guarantee is the right thing to do,” Sunak said at the government’s daily news conference.

“Some people have made some comparisons with what is going on in other countries. I think when you look at the totality of what we are doing it is more significant in scope and scale,” he added.

Germany and Switzerland have offered 100% state guarantees on some small business lending.

Reporting by David Milliken, editing by Estelle Shirbon

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