Payouts from government’s Covid-19 lending programmes hit £62bn
The total value of loans paid out under the government’s coronavirus business lending schemes hit almost £62bn last week, new data showed.
UK banks had lent a total of £61.9bn to businesses struggling with the impact of the Covid-19 pandemic as of 18 October, up from £57.3bn the previous month, according to figures from the Treasury.
A total of £17.2bn has been paid out to 73,094 businesses under the Coronavirus Business Interruption Loan Scheme (CBILS), which provides small and medium-sized businesses (SMEs) with loans of up to £5m. The government guarantees 80 per cent of CBILs financing.
Today’s figures also showed that £4.57bn of financing had been approved for 623 larger firms under the Coronavirus Large Business Interruption Loan Scheme (CLBILS), which also carries an 80 per cent government guarantee on loans and financing facilities of up to £200m.
A total of £770.8m was paid out under the Future Fund to 745 companies. The fund provides firms with government loans matched by funding from private investors.
The Bounce Back Loan Scheme (BBLS), which provides SMEs with 100 per cent government guaranteed loans of up to £50,000, continued to account for the majority of financing paid out via the government’s lending programmes.
As of 18 October a total of 1,336,320 BBLs worth a total of £40.20bn had been approved, the Treasury figures show.
Bounce back loans have come under scrutiny amid concerns that the scheme is vulnerable to fraudulent applications, and reports that many SME owners have been unable to access the loans despite being eligible for funding.
MPs have called on banks to ensure that no eligible businesses are “locked out” of the government-backed loans, but multiple small businesses have told CityAM their applications turned down with no explanation.
The government last month extended the deadline to apply for all four of its coronavirus loan schemes to the end of November, but the majority of the 28 lenders accredited to issue the loans have closed to applications from new customers.
The National Crime Agency has launched an investigation into organised crime linked to the BBLS, while the government spending watchdog has warned that the scheme could cost the taxpayer up to £26bn due to a combination of fraud and some businesses being unable to repay their loans.
It emerged last month that the British Business Bank (BBB), which administers the BBLS and Future Fund, raised formal objections to the programmes ahead of their launch.
In letters sent to business secretary Alok Sharma in May, BBB head Keith Morgan raised concerns including the BBL scheme’s “very significant fraud and credit risks”, and questioned whether the Future Fund would offer “value for money”.