United Kingdom

Smaller firms STILL waiting for vital Covid loans

Banks have lent more than £30billion to 745,000 businesses under emergency schemes – but hundreds of thousands are still missing out.

One in five companies which have applied for a lifeline loan under the Government's Bounce Back Loan Scheme, are still waiting for aid.

Although £21.3billion has been lent by High Street banks under the scheme, to 699,354 firms, another 173,838 applications are yet to be approved.

One in five companies which have applied for a lifeline loan under the Government's Bounce Back Loan Scheme, are still waiting for aid

Bounce Back was set up as an alternative to the Coronavirus Business Interruption Loan Scheme (CBILS), Under CBILS, the Government agreed to bear 80 per cent of any losses which lenders suffer.

Chancellor Rishi Sunak drew up Bounce Back, for smaller firms, providing a 100 per cent Government guarantee on losses, to assure banks that they wouldn't be on the hook if borrowers fail to repay.

But delays, errors and the volume of applications mean most banks have left many customers hanging for weeks.

One HSBC customer, who runs a plumbing and drainage company, had to sell his van after waiting for more than four weeks for a loan. 

The lockdown meant he was not able to work, had no income, and was struggling to put food on the table.

Ian Cass, at the Forum of Private Business, said the implementation of schemes had been 'shambolic'. 

He said: 'The Government was naïve to believe banks could effectively deliver these loan schemes.'

Some experts are worried thousands of firms will be unable to repay Government-backed loans, which would be a headache for the Treasury, as the taxpayer is guaranteeing £29.3billion worth of debt.

Banking insiders have warned up to half of borrowers may never repay Bounce Back loans, and the Institute of Directors has called for more time for debts to be paid off.

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