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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure GB-2020-19/944 Updated – measures in United Kingdom

The Bounce Back Loan Scheme

The Bounce Back Loan Scheme

Country United Kingdom , applies nationwide
Time period Temporary, 04 May 2020 – 04 November 2020
Context COVID-19
Type Other initiatives or policies
Category Supporting businesses to stay afloat
– Access to finance
Author Claire Evans (Warwick University) and Eurofound
Measure added 09 July 2020 (updated 09 October 2020)

Background information

On 4 May 2020, the UK Government launched the new Bounce Back Loan Scheme (BBLS), the latest in a round of measures proposed by the Government to help small businesses facing significant financial difficulties in the current climate. Under the BBLS, businesses will be able to apply for quick and easy-to-access loans between GBP 2,000 and up to 25% of their turnover; the maximum loan available under the Scheme is GBP 50,000. No loan repayments are required for the first 12 months and the government will cover the interest repayments for the same period.

For those businesses seeking more than GBP 50,000, BBLS is intended to sit alongside the Coronavirus Business Interruption Loan Scheme (CBILS). Under CBILS, a participating lender can provide up to GBP 5 million in the form of term loans, overdrafts, invoice finance or asset finance. Both schemes are operated by the British Business Bank, through accredited lenders

Content of measure

The scheme helps small and medium-sized businesses to borrow between GBP 2,000 and up to 25% of their turnover. The maximum loan available is GBP 50,000. The government guarantees 100% of the loan and there are no fees or interest to pay for the first twelve months. After twelve months, the interest rate will be 2.5% a year.

An SME can apply for the loan if the business:

  • is based in the UK
  • was established before 1 March 2020
  • has been adversely impacted by the coronavirus.

SMEs from any sector can apply with the exception of banks, insurers and reinsurers (but not insurance brokers); public-sector bodies and state-funded primary and secondary schools.

If a firm is already claiming funding under the CBILS (a loan of up to GBP 50,000), then this can be transferred into the Bounce Back Loan Scheme. Businesses have until the 4th of November to arrange this with their lender.

The loan will run for six years The length of the loan is 6 years, but businesses can repay early without paying a fee. No repayments will be due during the first 12 months.

The scheme is being run under the auspices of the British Bank, with eleven lenders participating in the scheme (including many of the main retail banks). Businesses should approach a suitable lender directly via the lender’s website. Applicants must complete a short online form and self-declare eligibility. The lender will make the decision as to whether a loan will be offered.


The following updates to this measure have been made after it came into effect.

01 October 2020

Details are emerging as to widespread fraud in relation to Bounce Back Loans in particular. The government had been warned in May that its flagship loan scheme to help small firms affected by COVID-19 was at "very high risk of fraud" from "organised crime". The state-owned British Business Bank (BBB) which supervises the Bounce Back Loan Scheme, had raised concerns.

In early May, just two days before the scheme launched, the chief executive of the BBB wrote of the "very significant fraud and credit risks", adding that it was "vulnerable to abuse by individuals and organised crime".  The Business Secretary was informed at the time that the bank could not guarantee "robust controls".  Other concerns included an "extensive reliance on customer self-certification" and "potential for market distortion". He said that the BBB had commissioned a review of the scheme by accountants PwC, which had classified its fraud risk as "very high".

The bank also raised concerns that the quick introduction of the scheme had "created huge operational challenges".  However, the Business Secretary had decreed that the scheme should go ahead despite the risks, because of what he called the "unprecedented situation facing the country".

24 September 2020

As part of the Chancellor's Winter Economy Plan, announced on the 24 September, the terms of the Bounce Back Loan scheme have been amended. For the million plus businesses which have taken out a Bounce Back Loan, there is now a more flexibility around repayment under the new Pay as You Grow flexible repayment system.

This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.

Use of measure

HM Treasury has published data on the total number of applications received, the number of successful applications and on the cumulative value of all loans/facilities granted.

Thus, on the 10 May, 363,646 applications had been received, of which 268,173 had been successful with a value of GBP 8.38 billion. By the 31 May, there had been 873,192 applications, of which 699,354 had been approved. The cumulative value of approved loans was GBP 21.29 billion.

On the 19 July (the most recent data available), 1,316,970 applications had been received, with 1,084,153 successful and with a cumulative value of GBP 32.79 billion.

By October, the latest Treasury figures show that there have been 1.55 million applications, with 1.26 million approvals and GBP 38.02 billion paid out.  

Target groups

Workers Businesses Citizens
Does not apply to workers SMEs
Does not apply to citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Unknown Unknown
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • Unknown
  • Main level of involvement: N/A


Unknown; information may have been provided. No formal involvement.

Views and reactions

On the 26th of June, the CBI published details of its engagement with government during the coronavirus crisis. It states that the government’s unprecedented actions to support businesses in response to the coronavirus pandemic have been welcome, with this providing a lifeline for  for many firms. However, with loans, grants, wage subsidies and tax relief soon to end, the CBI is urging the government to quickly act on the implementing 'the next wave of business support.'The CBI has asked that the government provide further grant support for SMEs via local authorities, extend tBusiness Rates relief in England to mid-size firms in all sectors, and extend the deadline for the Coronavirus Business Loan Scheme by at least a further three months. Further to this, the CBI is also calling for the government to kick-start consumer demand through targeted VAT cuts and accelerate local infrastructure upgrades (CBI, 2020).


  • 27 April 2020: UK Government 'Apply for a coronavirus Bounce Back Loan.' (
  • 26 June 2020: The CBI's Coronavirus Response (
  • 30 June 2020: HM Treasury Coronavirus Covid-19 Business Loan Scheme Statistics (
  • 24 September 2020: UK Government (2020) 'Chancellor outlines Winter Economy Plan.' (
  • 01 October 2020: BBC (2020) Ministers were warned of 'high risk' of Covid loans fraud. (


Eurofound (2020), The Bounce Back Loan Scheme, measure GB-2020-19/944 (measures in United Kingdom), EU PolicyWatch, Dublin,


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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.