Exclusive: Covid support almost equal to all bank lending last year
The amount of money UK businesses borrowed through the government’s coronavirus support schemes is almost equal to all bank lending for the same period last year, new figures show.
Covid-related lending schemes have provided £98.2bn in credit to businesses compared to the £100.5bn that was lent during the same five-month period last year, according to debt advisory specialist Altenburg Advisory.
Demand for business loans soared after the government introduced its Covid support schemes – CBILS, BBLS and the Future Fund – during the national lockdown.
Overall bank lending, through the government’s support schemes and non Covid-related lending, in the six months between March and August this year was up 63 per cent to £200.8bn compared to the same period last year.
But the number is falling as the deadline for applications for the widely-criticised CBILS loans approaches and lenders are expected to tighten credit criteria for other types of loans.
Fears have been raised over the scale of potential government losses through the lending facilities, especially the bounce back loans, which the government guarantees 100 per cent of.
It emerged last month that the head of the state-owned British Business Bank, which oversees the scheme, raised concerns over its vulnerability to fraud.
The National Crime Agency said it would investigate organised crime linked to BBLS after intelligence suggested it was being exploited. The crime agency said it had provided red flag indicators to the banking sector to “aid their detection of fraudulent applications.”
The recent warning by the National Audit Office that between £15bn and £26bn of CBILS and BBLS lending may be lost through fraud will likely tighten criteria further.
Dan Barrett, managing director at Altenburg Advisory said: “Traditional lenders will be much less keen to lend without the Government underwriting part or all of the loan so businesses will likely need to start looking at alternative lenders.”
“We expect that the decision-making process for business loans from high street banks will also slowdown once the Government guarantee is removed.”