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Coronavirus Loan Applications Exceed One Million

Posted 5 months ago

Coronavirus Loan Applications Exceed One Million
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More than one million businesses have applied for a Government-backed loan to help navigate the economic impacts of the pandemic.

Meanwhile UK businesses have furloughed nearly nine million jobs, under a scheme where the Government pays up to 80 per cent of an employee's salary while they stay at home.

Three UK Government-backed loan schemes, which are administered by high-street lenders, have paid out £34.9 billion to around 830,000 businesses. By Sunday night almost 1.06 million businesses had applied for one of the UK Government's three schemes.

By far the most popular was the bounce-back loans, designed to quickly funnel up to £50,000 to small firms. Nearly £24bn bounce-back loans have been paid to more than 782,000 companies.

Meanwhile, the Government's coronavirus business interruption loan scheme (CBILS) has lent out £9.56bn to 93,000 businesses, through the banks.

Labour shadow business secretary Ed Miliband said: "The Government's loan schemes are still not doing enough to save our businesses. Demand is rising yet progress is stalling, with a growing gap between total applications and agreed loans."

A scheme for larger businesses, called CLBILS, has lent £1.6bn to 244 firms from 615 applicants. "Despite ministers' promises that bounce back loans would help, 60 percent of larger businesses are rejected or languishing in the queue. An effective scheme is crucial for Britain's manufacturing sector but many have been locked out by technical Treasury rules, which must change," Mr Miliband said.

"Many businesses have been facing severe difficulty for months now. They cannot afford to wait any longer for support."

The news comes as applications are set to close for the furlough scheme. In total, 8.9 million jobs have been furloughed since the scheme launched. It has cost the Government £19.6bn to date.

UK Finance, the trade body representing the banks, said that its members have lent another £3.6bn to 85,000 businesses in the past week. Mike Conroy, director of commercial finance at UK Finance, said: "The banking and finance sector has a clear plan to help businesses of all sizes get through these challenging times.

"The industry acknowledges the role it must play and is providing an unprecedented level of support, with £35bn approved to 830,000 businesses through Government-backed lending schemes in less than three months.

"This sits alongside the broad package of measures the industry has introduced to help businesses access the support they need, including overdraft extensions and capital repayment holidays.

"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."

Commenting on the data, CEO of NextFin, Sacha Bright, said: “Although I would partially agree with Mike Conroy that banks have helped many businesses during this pandemic, I would argue that not all businesses have been covered. 

“Essentially, startups which represent nearly 3 million jobs in the UK and a huge section of the UK economy, banks are no longer the finance solution for startups. 

“Equity is the solution and the government needs to step in to stimulate private investment into early stage businesses.” 

We are currently campaigning to Free Our Startups. Sign our petition here. 



Authors: Oliver Murphy & Sacha Bright

Disclaimer

To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed.

Tagged: sme coronavirus news equity crowdfunding alternative finance



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