The coronavirus pandemic and multiple global lockdowns had a huge impact on businesses, with many closing completely and others temporarily shutting their doors to protect their finances. However, the government pledged to help businesses across the UK by offering a range of loans. These loans promised to help businesses in a range of sizes to ‘bounce back’ during and after the pandemic, providing them with a way to stay afloat in a global crisis. In this post, we are going to look at how effective the government-backed loans were for businesses during lockdown and how popular they were.
What Were The Government-Backed Loans?
The UK government launched a range of loans to help businesses of various sizes with surviving the economy crisis that coronavirus brought with it. This included:
- Bounce Back Loans – for SMEs, micro businesses and other businesses requiring small loans between £2,000 to £50,000.
- Coronavirus Business Interruption Loans – for smaller businesses with a turnover of less than £45m and looking for up to £5m in finance.
- Coronavirus Large Business Interruption Loans – for larger businesses with a group turnover of more than £45m and looking for up to £200m in finance.
- Future Fund – convertible loans from £250,000.
Each of these loans were designed specifically to help businesses cover any cash flow issues that were brought about by coronavirus. This could include running costs, staff wages, or rent.
How Popular Were The Government-Backed Loans?
Possibly as expected, the government-backed loans were quite popular as more and more businesses found themselves needing to temporarily close. According to gov.uk, new statistics reveal that three Bounce Back Loans were issued every minute since their launch in May 2020. More than 1.6 million benefited from each of the loans, which supported them to continue trading and protect jobs to prevent staff from seeking help from the likes of payday loans UK, and almost £180bn in funds have been borrowed since March 2020, when the first lockdown was announced.
As these government-backed loans have supported over a quarter of UK businesses, it is fair to say that these loans were highly sought-after and were able to provide help for a range of industries. This included travel, hospitality, and high street stores.
Have The Government-Backed Loans Really Helped Businesses During Lockdown?
According to the Chancellor of the Exchequer, Rishi Sunak, the Bounce Back Loan scheme alone has helped a small business owner every 20 seconds since the programme launched. While many businesses simply could not maintain momentum throughout the pandemic, many were able to use the funds provided to stay afloat and build a plan for life beyond coronavirus.
Due to the success of these loans, a Recovery Loan Scheme will run until 31st December 2021 and will ensure that lenders continue to have the confidence to provide support. This is alongside offering viable businesses the chance to access government-backed finance throughout 2021 as we move out of lockdown. This scheme is operating across the UK and provides an 80% guarantee to lenders for term loans, overdrafts, and invoice and asset finance. This means it will be highly beneficial as businesses start to reopen and move into a more secure financial position.
If you need any more guidance on the government-backed business loans, please see the gov.uk website or access impartial help from the Money Advice Service.