Government backed loan schemes dish out £27.5 billion to businesses
Banks and other lenders have dished out £27.5 billion in loans to more than 650,000 businesses to date as part of government-backed loan schemes.
In the past two months, the banking industry has helped businesses of all sizes who face financial challenges due to the Covid-19 pandemic.
Banks have provided funding as part of three government-backed schemes; the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
In the past week alone, lending totalling £5.4 billion was provided to more than 146,000 businesses through these three government-backed schemes.
The Bounce Back Loan scheme, which is designed for sole traders and micro-businesses, has issued loans of £18.45 billion, with £4.3 billion of this lending approved in the last week.
The number of loans agreed through the BBLS increased by over 143,000 in the last week to reach 608,000.
The banking industry has supported 43,000 businesses through the CBIL scheme, lending £8.2 billion in total.
For larger firms, 154 businesses borrowed £820 million through the CLBIL scheme.
Stephen Jones, Chief Executive of UK Finance, said:
The banking and finance industry has a clear plan to help businesses get through these tough times.
Lenders are providing an unprecedented level of support to firms affected by the Covid-19 crisis, with £27.5 billion being approved to over 650,000 businesses through government-backed lending schemes so far, and a further £20.5 billion drawn under bank arranged commercial paper facilities.
Businesses can also access a wide package of support measures as part of the industry’s plan, including extended overdrafts, capital repayment holidays and asset-based finance.
It’s important to remember that any lending provided under government-backed schemes is a debt not a grant, and so firms should carefully consider their ability to repay before applying.
Government-backed lending is overseen by the British Business Bank, which has accredited six more lenders for the CBIL schemes.
These further lender accreditations mean more than 70 banks and lenders, including alternative finance providers, are now participating.
Businesses can now borrow up to £200 million under the terms of the CLBIL scheme, following changes announced by the government.
Where banks lend money under any of the government-backed loan schemes, these are debts rather than grants.
Despite government backing, businesses have a legal commitment to make every effort to repay the loans.
Before applying for a loan, firms should take into account their ability to make repayments, as failure to do so could impact their credit file.