Banks lend £31 billion in "bounce back" loans
THE scale of the effort by City banks to funnel money to struggling firms was laid bare today by government statistics showing that more than 1 million “bounce back” loans have been handed out.
Figures out today show what 1.01 million of the loans have been made at a total of nearly £31 billion.
The Bounce Back Loan Scheme (BBLS) is controversial since banks have been encouraged, or indeed ordered, to employ far more relaxed affordability criteria than usual.
The government has told banks simply to back firms to prevent the mass unemployment that would sink the economy.
While the loans are 100% guaranteed by the taxpayer, banks are still obliged to try and reclaim the loans first.
One bank analyst said: “The banks are owed a lot of money. How much do they get back from the actual borrowers?”
Stephen Pegge, managing director of commercial finance at UK Finance, said: “The banking and finance industry is continuing to deliver on our plan to help businesses of all sizes get through these challenging times.
“Just over three months since the first of the Covid-19 lending schemes launched, over one million businesses have been supported thanks to the tireless efforts of staff working on the ground.”
Businesses large and small and from all parts of the economy have taken advantage of the scheme and of the Coronavirus Business Interruption Loan Scheme (CBILS).
Bikes-to-car parts seller Halfords, which has seen its motoring arm hit by the lockdown keeping cars off the road, today secured £25 million through CBILS.
It will use the funding, which was equally split between HSBC, Barclays and Lloyds, to bolster its balance sheet as it handles the fallout from Covid and the gradual return of traffic to the roads.
Pegge added: “Today’s figures represent part of an unparalleled package of support from the industry which includes commercial lending, capital repayment holidays, extended overdrafts and asset-based finance.”
It is not clear how big the BBLS balance sheet could get, but there are already another 240,000 pending loan applications.
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