UK businesses borrow £ 180bn during pandemic in three loans taken out every minute

British Chancellor of the Exchequer Rishi Sunak. Photo: Jessica Taylor / Reuters / British Parliament

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

According to the latest government statistics, three Bounce Back loans have been issued every minute since its launch in May of last year.

The Treasury’s latest monthly update on its emergency lending programs and the COVID Business Finance Facility (CCFF), showed that more than 1.6 million UK businesses have benefited from government support, which enabled them to continue to trade and protect jobs and livelihoods across the country.

These emergency loan programs – the Bounce Back Loan Program, the Coronavirus Large Business Interruption Loan Program, and the Coronavirus Business Interruption Loan Program – have supported more than a quarter of businesses. UK.

They close for new applications on March 31, however, a new recovery loan program will be open for applications on April 6 to ensure support is available for those who still need it.

The CCFF alone has directly supported businesses that employ nearly 2.5 million people in Britain, including those in the automotive industry, travel, hospitality and department stores. It also closed to new issues from March 23, but will continue to fund companies with outstanding loans under the program until March 2022 at the latest.

READ MORE: UK government continues to talk about alternative loan scheme

“I said we would do whatever it takes to protect jobs and livelihoods and that’s exactly what we did,” Chancellor Rishi Sunak said.

“I am delighted that our Bounce Back loan program has worked so effectively that it has issued three loans every minute since its launch last May. This means that every 20 seconds a hardworking small business owner has benefited from this support.

“We will continue to protect jobs with our new stimulus loan program – part of our larger jobs plan – as we emerge from this crisis. “

Craig Beaumont, FSB’s Head of External Affairs, said: “1.6 million small businesses have now been helped through a terrible year by getting Bounce Back loans. As the unlock takes place, the economic recovery will rely on the successor scheme to pull all cylinders. “

The government’s stimulus loan program will run until December 31 and will ensure that lenders continue to have the confidence to provide support, and that viable businesses can access financing throughout 2021 following the disruption of the market. pandemic.

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

It comes after record levels of small businesses have requested external financial support in 2020.

New data from the British Business Bank (BBB) ​​revealed that gross bank lending to SMEs, excluding overdrafts, was up 82% to £ 104 billion ($ 144 billion), thanks to the use government loan programs, with significant additional demand for such loans expected in 2021.

The report also found that almost half (45%) of SMEs requested external financial support in 2020, up from 13% in 2019, and that nine in ten companies (89%) did so because of the impact of COVID-19.

About 75% of these SMEs did so to improve their cash flow.

“That three-quarters of small businesses have access to finance to help manage their cash flow underscores how disruptive COVID-19 is making our late payments crisis worse, a crisis that destroys 50,000 businesses a year for one. cost of at least £ 2.5 billion to the economy, “Federation of Small Business national chairman Mike Cherry said.

“The question now is what steps should policymakers and banks take to ensure that emergency debt delivers value to the economy? More than half of people with facilities say that a student loan approach – where repayments are only made once a business is profitable again – would be a useful way forward “, he added.

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