UK markets open in 57 minutes
  • NIKKEI 225

    +331.08 (+1.15%)

    +149.83 (+0.76%)

    +1.04 (+1.20%)

    +6.30 (+0.35%)
  • DOW

    +239.61 (+0.71%)

    +77.30 (+0.39%)
  • CMC Crypto 200

    +6.96 (+1.22%)
  • ^IXIC

    -25.55 (-0.19%)
  • ^FTAS

    +11.29 (+0.27%)

UK businesses borrow £180bn during pandemic as three loans written every minute

·Business Reporter, Yahoo Finance UK
·3-min read
UK chancellor of the exchequer Rishi Sunak. Photo: Jessica Taylor/Reuters/UK parliament
UK chancellor of the exchequer Rishi Sunak. Photo: Jessica Taylor/Reuters/UK parliament

British businesses have borrowed a total of £180m ($246m) in emergency loans since the start of the coronavirus pandemic, it has been revealed.

According to the latest government statistics, three Bounce Back Loans were issued every minute since its launch in May last year.

The Treasury’s final monthly update on its emergency loan schemes, and the COVID Corporate Financing Facility (CCFF), showed that more than 1.6 million UK firms benefited from government support, which enabled them to keep trading and protect jobs and livelihoods across the country.

These emergency loan schemes - the Bounce Back Loan Scheme, Coronavirus Large Business Interruption Loan Scheme and Coronavirus Business Interruption Loan Scheme - supported more than a quarter of businesses in the UK.

They close for new applications on 31 March, however, a new Recovery Loan Scheme will open to applications on 6 April to ensure support is available to those who still need it.

The CCFF alone has directly supported firms that employ almost 2.5 million people in Britain, including those in the car industry, travel, hospitality, and high street stores. It also closed to new issuance from 23 March, however, it will continue to provide finance for firms with outstanding loans in the scheme until March 2022 at the latest.

READ MORE: UK government continues to talk up alternative lending scheme

“I said we would do whatever it takes to protect jobs and livelihoods and that is exactly what we have done,” chancellor Rishi Sunak said.

“I’m delighted that our Bounce Back Loan scheme worked so effectively that it issued three loans every minute since its launch last May. That means every 20 seconds a hardworking small business owner benefited from this support.

“We’ll continue to protect jobs through our new Recovery Loan Scheme – part of our wider Plan for Jobs – as we move out of this crisis.”

Craig Beaumont, chief of external affairs at FSB, said: “1.6 million small businesses have now been helped to keep going through an awful year by securing Bounce back loans. As the unlock takes place, the economic recovery will rely on the successor scheme to fire on all cylinders.”

The government’s Recovery Loan Scheme will run until 31 December and will ensure lenders continue to have the confidence to provide support, and viable businesses can access finance throughout 2021 following the disruption of the pandemic.

WATCH: What UK government COVID-19 support is available?

It comes after record levels of smaller businesses sought external financial support in 2020.

New data by British Business Bank (BBB) found that gross bank lending to SMEs, excluding overdrafts, was up 82% to £104bn ($144bn), driven by use of government loan schemes, with significant further demand for such loans expected in 2021.

The report also found almost half (45%) of SMEs applied for external financial support in 2020, compared to 13% in 2019, and that nine in ten (89%) businesses did so because of the impact of COVID-19.

Around 75% of these SMEs did so to help with their cashflow.

“That three quarters of small firms are accessing finance to help manage cashflow underscores how COVID-19-linked disruption is exacerbating our late payment crisis, a crisis which destroys 50,000 firms a year at a cost of at least £2.5bn to the economy," the Federation of Small Businesses' national chairman Mike Cherry said.

“The question now is, what steps should policymakers and banks take to ensure emergency debt delivers value to the economy? More than half of those with facilities say a student loan approach – whereby repayments are only made once a firm is profitable again – would mark a helpful way forward," he added.

WATCH: Should I pay off debt or save money during the coronavirus pandemic?

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting