Written by: Keith Tully
Updated: 8th July 2020
The number of emergency loans approved for small businesses across the UK has now topped one million, according to the government’s official figures.
All loans handed out as part of the Bounce Back Loans scheme are guaranteed by government and their lenders do not charge any interest for the first 12 months.
The intention behind the Bounce Back Loans initiative was to provide small companies with financial support that so many urgently needed as the coronavirus crisis swept through the economy earlier this year.
Many hundreds of thousands of small firms suddenly found themselves facing major cashflow issues and the prospect of insolvency after the UK went into lockdown.
Initial government efforts designed to enable companies to access emergency loans struggled to have the desired effect, with the process being beset by delays and applications being rejected too frequently.
A critical problem initially was found to be that where the government was not providing 100 per cent backing for loans, banks and other lenders were too often unwilling to lend any money to firms who they weren’t certain would be able to make their repayments.
However, this situation meant that large numbers of small businesses who needed loans urgently simply could not get access to them.
By way of a response to those dynamics the government set up the Bounce Back scheme, which has since been distributing loans on a significant scale and with 100 per cent guarantees in place for lenders.
Leading figures within the banking industry have expressed concern that high proportions of the loans given out under the Bounce Back scheme might never be repaid.
Nevertheless, in the short term, the benefits for small scale enterprises have been very significant with more than one million UK businesses now understood to have had their emergency loans approved.
“Our small businesses are the powerhouse of our economy and will help drive our recovery as we bounce back from this global crisis,” chancellor Rishi Sunak said in a statement.
“We’ve worked hard to give small businesses the help they need- from loans and grants to paying the wages of their staff,” he added.
“I’m delighted that more than a million loans have been approved – and we will continue to do all we can.”
12th August 2020
The UK economy has officially fallen into recession after suffering the sharpest downturn on record between April and June of this year.Read More
5th August 2020
The British Chambers of Commerce (BCC) has called on the chancellor of the exchequer Rishi Sunak to change his approach to providing support to businesses across the UK economy.Read More