The newest COVID-19 support package created by the UK government appears to be a big hit with UK businesses. According to a post by HM Treasury, over 69,000 loans valued at more than £2 billion have been approved in just 24 hours.
Bounce Back Loans target the smallest of firms with government-guaranteed loans of up to £50,000. These loans may represent a crucial lifeline for these small businesses to tough it out in an economy that has been devastated by a pandemic.
HM Treasury reports that the seven largest lenders; Barclays, Danske, HSBC, Lloyds, RBS, Santander, and Virgin Money, received more than 130,000 Bounce Back Loan Scheme applications on May 4th – the first day the program was available. For the moment, no Fintech lenders have been added to the list of accredited lenders but this is expected to change soon.
The Chancellor of the Exchequer, Rishi Sunak, commented on the initial data:
“Small businesses will be the driving force of our recovery from the pandemic, creating jobs and securing economic growth. 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.”
UK Finance, the collective voice for the banking and finance industry, commented on the results as well.
Stephen Jones, Chief Executive of UK Finance, stated:
“Bounce Back Loans form a key part of support measures put in place by the government, working with the banking and finance industry to help businesses through these difficult times. This scheme gives smaller businesses including sole traders rapid access to debt finance if they need it. Bank staff have been working flat out since the scheme launched on Monday morning to process applications and get money out to eligible borrowers and these figures are testament to their hard work and the commitment of the industry to support businesses of all sizes. While businesses only need to fill in a simple form online to apply, it’s important to remember that this type of finance is debt, not a government or bank grant, and will need to be repaid by the borrower over the six year term of the loan. All businesses should consider carefully their repayment obligations before completing a Bounce Back Loan application. Under the terms of the scheme lenders are required to seek to recover any unpaid interest and principal on Bounce Back Loans from borrowers.”
Additional information is available on the British Business Bank website.