Pandemic loan scheme only saved 5% of businesses from closure

New analysis by the British Business Bank shows that the Government’s £47 billion Bounce Back Loan Scheme rescued around one in 20 participating businesses.

The pandemic support scheme, which offered taxpayer-guaranteed facilities of up to £50,000 to business owners to help the firms survive lockdown measures, prevented the failure of between 5% and 6.5% of borrowers between April 2020 and March 2021.

The self-reported year two survey data suggests that between 175,000 and 618,000 BBLS borrowers could have permanently closed between April 2020 and December 2021 in the absence of the schemes.

The survey data also suggests that between 4,000 and 25,000 CBILS/CLBILS borrowers could have permanently closed between April 2020 and December 2021 in the absence of the schemes.

In the second in a series of reports evaluating the government’s Covid-19 emergency loan schemes, business responses continue to support first year findings that hundreds of thousands of jobs could have been lost without the £78bn of funding guaranteed under the schemes.

Banks providing the loans have received payments of £8.5 billion from the Government, while suspected fraud has been flagged on loans totalling £1.7 billion.

In March 2020, in response to the global pandemic and corresponding wide-ranging business impacts and uncertainty, the government rapidly designed and deployed a series of three loan-guarantee schemes – the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Bounce Back Loan Scheme (BBLS). These aimed to support businesses across the UK which were experiencing lost or deferred revenues, leading to disruptions to their cashflow.