Factsheet for case GB-2020-19/944 – Updated – measures in United Kingdom
|Country||United Kingdom , applies nationwide|
|Time period||Temporary, 04 May 2020 – 04 November 2020|
|Type||Other initiatives or policies|
Supporting businesses to stay afloat
– Access to finance
|Author||Claire Evans (Warwick University) and Eurofound|
|Case created||09 July 2020 (updated 09 October 2020)|
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
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:
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.
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.
|Does not apply to workers||
||Does not apply to citizens|
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Form||Not applicable||Not applicable|
Social partners' role in the implementation, monitoring and assessment phase:
Unknown; information may have been provided. No formal involvement.
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).
Eurofound (2020), The Bounce Back Loan Scheme, case GB-2020-19/944 (measures in United Kingdom), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch
Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.