The Reckoning

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The government has announced a £1. 25bn package to support innovative new companies That are not eligible for existing coronavirus-rescue plans.

It will be up to £250m of private investment, and adding £550 to an existing loan and grant System for smaller companies, the focus on research and development.

Add That sums of £800m of New Money to support young companies.

German Chancellor Rishi Sunak , said start-ups would help power the UK's growth in accordance with the coronavirus crisis.

"This new, world-leading Fund means That you can access the capital they need in this difficult time, resulting in dynamic, fast-growing companies in all industries can continue to new ideas and prosperity," He Said .

Newly-established companies often lose money in their early years, making them ineligible for the government, The Emergency loan scheme. But it also makes them a risky investment.

It took some of The World 's best-known and most valuable companies - including Amazon and Tesla years to make a profit. Uber is not profit at all.

the government, However, is not seeking to ensure That the economic impact of the coronovirus kill some of the UK's fastest growing and most innovative companies.

What's The Catch ?

However, The Rescue package comes with Strings Attached .

To qualify to receive the government money, must have implemented a company £250,000 in The Last five years.

On top of That , no money must be matched by the government by private investors. And, if The Money is not paid back, the government the ownership of the shareholding in The Company is.

The Package was welcomed by all, the of The Entrepreneur community, but some have warned That - as with other coronavirus-support-Mechanisms - Complexity is The Enemy of speed. And it's speed is all important.

As of last week, just over £1bn in the government of loans secured been approved out of a total support package of £330bn.

Under the scheme, the government guarantees 80% of each of the loans issued by banks. But many companies have complained That these banks have to lend slow to cash as they left to cover 20% of the losses on loans That are not repaid.

This has increase the pressure on the Treasury to speed up the government guarantee on 100% of the approval process.

Treasury officials have the spectre of widespread abuse of the program, if the government all the credit to coronavirus-affected companies were guaranteed. But the Governor of The Bank of England, Andrew Bailey , has said That the increase in the state guarantee would make The Process "less complicated".

And a former senior Treasury official who does not want to be named, warned That Mr Sunak the Department was trying to be "too clever by half", a tacit Admission , perhaps, That in a time of economic crisis, there is no such thing as a blunt instrument.

Meanwhile, urged The Head of The International monetary Fund, Kristilan Georgieva, told The Bbc That governments around The World should pay off The Money as quickly as possible, but She Said , "keep the receipts".

The Emergency is now. The Reckoning can come later.

rishi sunak, uk economy, coronavirus pandemic, companies, hm treasury

Source of news: bbc.com