28 May 2020
SMEs borrowing £615million per day to get through lockdown
UK small businesses are borrowing over £600million a day to ride out the Coronavirus crisis, new figures have revealed.
Figures published by HM Treasury reveal that lenders have approved £27.5billion to more than 650,000 businesses so far through the three major government-backed lending schemes.
The banking industry says it is providing "an unprecedented level of support" to businesses across the United Kingdom in response to the Covid-19 crisis through the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
In the past week alone, more than £5.4billion in lending has been provided to over 146,000 firms through government-backed lending schemes.
Small business borrowing
The Bounce Back Loan scheme - aimed at sole traders and micro businesses - has seen £18.4billion provided by lenders. £4.3billion has been approved in the last week, an average of £615million each day. The number of loans agreed through the scheme increased by over 143,000 to 608,000.
Figures from UK Finance - the umbrella body for the UK banking sector - shows the industry has supported 43,000 businesses through the CBIL scheme with £8.2billion in lending. 154 larger firms have received finance via the CLBIL scheme, totaling £820million. Across the two schemes this is an increase of £1.1billion over the past week, with more lending set to be approved over the coming days.
These government-backed schemes are just one part of the banking and finance sector’s plan to help businesses get through these tough times, with the industry also providing working capital facilities, overdraft extensions, capital repayment holidays and asset-based finance.
Difficult decisions to come
Despite the financial support, many firms face difficult decisions in the months ahead.
A new survey published today shows that one in four firms using the Coronavirus Job Retention Scheme say they will not be able to pay anything towards salaries after the scheme is cut back.
The UK Government is to reduce its contribution from 80% of furloughed staff's wages to 60% from the end of July. So far 8.4 million workers have been covered at a cost of £15billion to the state.
A survey of 700 business leaders by the Institute of Directors (IoD) revealed that half of those using the Job Retention Scheme for staff said they could provide 20% or above toward furloughed workers’ full-time salaries between August and October. But a quarter said they could not afford any amount.
As businesses return to work the IoD has called on the Government to provide targeted financial assistance for SMEs needing to make health and safety adaptations to their workplaces. Around one in three business leaders polled said financial support for adjusting workplaces would help get their organisation operating safely under social distancing, second only to better clarity around commuting on public transport.
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