Covid-19 loan schemes shell out £73bn to businesses

The latest Treasury figures show that the banking and finance industry has provided almost £73bn in support to 1.6 million businesses through government-backed coronavirus lending schemes

In total, the UK banking and finance industry has supported around 27% of British businesses through the government-backed coronavirus lending schemes, almost a year since the schemes were first put in place.

The Bounce Back Loan Scheme (BBLS) has helped more than 1.5 million small businesses affected by the pandemic.

Almost 29,500 Bounce Back Loans have been approved over the past month, bringing the total number of small enterprises to access the scheme to over 1.5 million since it launched in May last year. More than £45.5bn has now been lent through this scheme. These totals include businesses which have opted to ‘top-up’ their Bounce Back Loans to the full £50,000, or a maximum of 25% of their turnover if lower, available through the scheme.

The Coronavirus Business Interruption Loan Scheme (CBILS) has provided finance to almost 92,500 businesses. Almost 92,500 businesses have accessed £22bn through the CBIL scheme, whilst over 700 larger firms have utilised the Coronavirus Large Business Interruption Loan Scheme, which has provided almost £5.3bn in support.

Almost £5.3bn in lending has been provided to over 700 businesses through the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

The vast majority of firms in the UK have an existing relationship with at least one of the 29 lenders accredited to the BBL scheme, or the 118 lenders now accredited to the CBIL scheme.

Government-backed loans are just one part of the industry’s plan to support businesses across the UK. Lenders continue to provide a range of additional measures, including working capital extensions, overdraft extensions and capital repayment holidays. The industry will continue to support businesses over the coming year as economic uncertainty persists as a result of the pandemic.

Stephen Pegge, managing director of commercial finance at UK Finance, said: ‘The UK’s banking and finance industry has continued to provide unprecedented levels of support to help businesses through the pandemic. The sector has delivered almost £73 billion in financial assistance to nearly 1.6 million businesses through the government-backed loan schemes since they were put in place last year.

‘The newly outlined plans to ease lockdown restrictions mean many businesses are beginning to see a light at the end of the tunnel. However, as the pandemic continues to cause significant economic uncertainty, many individual businesses and some specific sectors are facing extended disruption and may find themselves in financial difficulty in 2021.

‘With widespread restructuring and recovery situations expected, the finance sector and related professional services are focused on the provision of capacity and expertise to help support the turnaround of companies where possible, while ensuring the sympathetic treatment of those businesses which are no longer viable.’

Earlier this month the government announced that Bounce Back Loan borrowers will now have the option to tailor payments according to their individual circumstances with the option to delay all repayments for a further six months. They will also be given up to 10 years to repay the loans under the Chancellor’s so-called Pay as you Grow model. 

The first loan repayment date comes due in May 2020 and the Budget may still offer some respite for borrowers taking into account the plans for the roadmap out of lockdown which sees some businesses unable to open fully until 21 June.

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