Government-backed Covid loans swell to £65.5bn
The government has given banks guarantees on £65.48bn of lending to businesses hit by the coronavirus via the Bounce Back Loan scheme.
According to the latest finance ministry data, the biggest part of the lending was to small businesses, for which banks received a 100% state guarantee on £42.18bn of loans that have been made.
The new total represents around a £2.5bn increase on last month, when nearly £62bn had been handed out in loans.
Bounce Back Loans are 100 per cent government-backed loans introduced to help keep small businesses afloat through the economic disruption caused by the Covid-19 pandemic. The National Audit Office has suggested the programme could cost the taxpayer as much as £26bn.
Businesses can apply for up to £50,000 in loans under the scheme and have 10 years to repay.
The Treasury was forced to extend the application deadline for the 100 per cent state-backed loans to January after England was placed into another lockdown earlier this month.
Bounce Back Loans have also come under scrutiny following reports by Morning Wire that small businesses were being “locked out” of applying for the loans despite being eligible for funding.
Kevin Hollinrake, chair of the all-party parliamentary group (APPG) for fair business banking, told Morning Wire that top-ups risked creating a “two-tier system”, with SMEs that bank with non-traditional lenders “particularly disadvantaged”.
Hollinrake added that the introduction of top-ups “doesn’t solve the problem if you weren’t able to get a loan in the first place”. “For many people that is existential, it is the difference between succeeding and failing,” he said.