Following the scheme’s launch on Monday, over 69,000 coronavirus Bounce Back loans, equating to over £2 billion, were approved by banks, according to Chancellor of the Exchequer Rishi Sunak.
The scheme, through which SMEs can apply for loans of up to £50,000 to help them through the coronavirus pandemic, saw a huge amount of interest following its launch.
The seven largest lenders alone (Barclays, Danske, HSBC, Lloyds, RBS, Santander and Virgin Money) received over 130,000 applications within the first day.
According to some figures, the number of applications had risen to over 200,000 by the close of the day on Tuesday, with the Treasury issuing assurances that lenders were processing applications as quickly as possible.
Commenting on the first day figures, Rishi Sunak said: “Small businesses will be the driving force of our recovery from the pandemic, creating jobs and securing economic growth.”
“These loans will help them bounce back from this crisis - getting money fast - so it’s great to see more than 69,000 business benefitting in just the first day. It’s vital this speedy progress continues in the days and weeks ahead.”
However, despite such positive rhetoric, the scheme has still attracted some criticism in its first week. Federation of Small Businesses (FSB) chairman Mike Cherry said that, in spite of a “promising start” for the scheme in which it had “come out of the blocks strong”, difficulties were being reported.
“Unfortunately, we are hearing reports that bounce-back application forms are hard to access or inquiries are simply being acknowledged with a ‘We’ll call you’ message and nothing further,” he said.
“Many of the most vulnerable business owners – particularly sole traders – only have personal banks accounts and, as a result, are being told they cannot access a bounce-back loan. It’s vital that they are helped to secure the finance on which many will depend to make it through this incredibly challenging time.”
“All in all it’s a very promising start, but there’s still work to do”, Cherry said.
One lender that was experiencing particular difficulties in relation to Bounce Back applications was Barclays, with the Treasury Select Committee confirming that it had written to the bank following persistent reports that businesses were having difficulties submitting the application form.
In a letter to Barclays UK Chief Executive Matt Hammerstein, Treasury Committee Chairman Mel Stride asked the bank "to explain what is happening, and what [the bank] is doing to fix any issues that have arisen.”
He added: "Issues that hamper this are very frustrating to customers, and may in some cases threaten business survival”. Stride also pointed out Hammerstein’s assurances to MPs during an earlier committee hearing that the bank’s system would be able to cope with demand.
On a day that Barclays' London headquarters were targeted by climate activists, businesses reported significant delays with their applications. Some said they had been locked out, while there were reports of waits in excess of 2 hours to speak to someone on the phone.
On Monday, Barclays confirmed that its portal had seen huge demand and that it had limited access to ensure that the system delivered safely, but denied that there had been a technical failure. By Tuesday afternoon at 4PM, Barclays said that it had approved 32,000 Bounce Back loan applications. However, some customers continued to report difficulties with the bank on Thursday.
The Bounce Back scheme forms part of a wider package of government-backed support for UK businesses and employees, including the Coronavirus Job Retention Scheme, the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
According to industry body UK Finance, over £5.5 billion has been distributed to UK SMEs under the CBILS as of Thursday. However, the scheme has attracted criticism, with some companies reporting major difficulties in applying for and accessing credit.
As CBILS and CLIBLS loans are only 80 per cent backed by the government (Bounce Back loans are 100 per cent government-backed), there have also been concerns that the 20 per cent risk banks are still being exposed to has made them hesitant to lend.
To read about how coronavirus is impacting M&A in the UK and across the world, click here.
Or click here to read BSR's article on CBILS and how entrepreneurs can use the scheme to fund investments.
An excellent opportunity exists to purchase the business and assets of a well-established festival business that has built up a successful annual festival in the South East of England. Offers invited.
LEASEHOLD
A sale will be executed at the earliest opportunity. All expressions of interest must be registered by no later than 22 July 2020. An excellent opportunity exists to purchase the business and assets of a well-established commercial lighting contracto...
LEASEHOLD
An opportunity to acquire a UK-based telecoms and IT multi-layered services provider delivering leading edge services to contracted telecoms partners. Successful model operating for over 17 years, in 3 different countries. Significant professional fr...
Sign up to receive our acquisition alert emails to get your FREE guide
Business Sale Report is your complete solution to finding great acquisition opportunities.
Join today to receive:
All this and much more, including the latest M&A news and exclusive resources