Gross lending in Q2 was 50 per cent more than the whole of 2019

Gross lending in the second quarter reached £34.5bn, 50 per cent more than the annual total in 2019, UK Finance has found.

The trade body’s Business Finance Review showed that the majority of this was through government loan schemes, such as the coronavirus business interruption loan scheme (CBILS) and bounce back loan scheme (BBLS).

Government schemes accounted for about three-quarters of all gross lending in the first half of the year. By the end of June more than a million businesses had been approved funds through the schemes.

Read more: Half of SMEs have adapted to survive Covid

In just two months, 48,700 CBILS loans had been provided by a wide range of lenders.

However, this was overshadowed by demand for BBLS, which reached one million facilities by the first week of July. The scheme maintained an overall approval rate of eight in every 10 loan applications during the second quarter due not requiring a formal credit assessment.

£40bn was delivered through government schemes across all regions of Great Britain, with more funds were deployed to the areas hardest hit by Covid-19.

The North East and Northern Ireland had substantially higher regional uptakes, despite having lower than average business populations, showing greater demand for financial support in those areas.

Read more: £57bn provided to SMEs through government schemes

“With lockdown support measures fully operational in the second quarter, our data shows that many companies still had a degree of financial headroom from a combination of existing facilities and deposits, but the demand for additional support was substantial,” said Stephen Pegge, managing director of commercial finance at UK Finance.

“Gross lending for the second quarter was up 50 per cent on the entire annual total in 2019, reflecting this significant demand with new overdraft facilities as well as the government’s business interruption finance schemes providing support.”

“The finance industry continues to work closely with government and regulators to deliver the support schemes alongside its usual assistance measures to help viable businesses as they plan for recovery.”

Read more: SME loan applications fell in third quarter