Minerva Studio - stock.adobe.com
More than 69,000 loans, worth more than £2bn, have been approved in just the first couple of days of the small and medium-sized enterprise (SME) targeted Bounce Back finance scheme.
The government launched the scheme on Monday, with the idea of getting up to £50,000 into the hands of small firms in days. All that was needed was filling in a two-page form which simply requires them to prove they were viable before the crisis started. No interest or capital repayments will be required for the first year, with the government picking up the interest fees.
The Bounce Back loan scheme was designed to plug a gap that emerged when it started to become clear that many small firms had not been able to access funds through the Coronavirus Business Interruption Loan Scheme (CBILS).
The Chancellor of the Exchequer, Rishi Sunak, heralded the progress made on the Bounce Back scheme and said the government recognised the importance of small businesses to the UK economy.
“Small businesses will be the driving force of our recovery from the pandemic, creating jobs and securing economic growth,” he said. “These loans will help them bounce back from this crisis – getting money fast – so it’s great to see more than 69,000 business benefitting in just the first day.”
“It’s vital this speedy progress continues in the days and weeks ahead,” he added.
There have been some criticisms of the scheme’s limited amount of lenders – Barclays, Danske, HSBC, Lloyds, RBS, Santander and Virgin Money – with reports surfacing earlier this week of some banks’ online systems failing to support applications. The government’s CBILS started with 40 lenders lined up to deal with applications.
There are reports that on the first day of the scheme, more than 130,000 applications were made, leaving many frustrated with the system.
The Treasury indicated that the lenders were “working hard to process and approve the rest [of the applications] as quickly as possible”.
Mike Cherry, national chairman of the Federation of Small Businesses, gave a cautious welcome to the Bounce Back Loan Scheme (BBLS), but warned that it needed to be consistent and get to a wide audience of small firms.
“The BBLS has come out of the blocks strong – enabling £2 billion of small business lending in its first day, a sum that took its predecessor loan scheme weeks to achieve,” he said.
“From here though, it’s important that efforts to increase competition in the small business banking market are maintained. More banks and alternative lenders need to be accredited to the BBLS,” he said. “The Treasury, British Business Bank and Bank of England should work together on how this can be best achieved.”
“Unfortunately, we are hearing reports that bounce back application forms are hard to access or enquiries are simply being acknowledged with a ‘we’ll call you’ message and nothing further.”
So far, the government has used a combination of business loans, staff furloughing schemes and the cutting of business rates to ease the burden on small firms.