The government-backed Covid loan schemes saved between 150,000 and 500,000 businesses and between 500,000 and 2.9 million jobs, an initial assessment has found.
The first evaluation from London Economics and Ipsos, which was commissioned by the British Business Bank (BBB), found the coronavirus business interruption loan scheme (CBILS), bounce back loan scheme (BBLS) and coronavirus large interruption loan scheme (CLBILS) met their primary objectives of unlocking credit for businesses at scale and speed.
They resulted in £78bn-worth of loans, reaching just over a quarter of smaller businesses in the UK.
The research estimated that without these schemes, an additional 10 to 34 per cent of BBLS borrowers (146,000 to 505,000 businesses) and a further seven to 28 per cent of CBILS/CLBILS borrowers (5,000 to 21,000 businesses) could have permanently ceased trading in 2020.
It is also estimated that 500,000 to 2.9 million jobs could have been lost in the absence of the schemes.
The most common uses of the funds were working capital and to provide financial security.
The introduction of BBLS – which offered loans of up to £50,000 which were 100 per cent guaranteed by the government – helped ease pressure on lenders and accelerated timescales for loan approvals. 270,000 BBLS loans were issued in the first week, and almost 800,000 in the first month.
The evaluation found that if lenders had conducted their standard checks on the large volume of BBLS applications, small businesses would have had to wait significantly longer for a loan which could have put the survival of the business at risk.
“The Covid-19 emergency loan schemes were designed to address a drastically altered economic landscape for smaller businesses as lockdowns took effect,” said Catherine Lewis La Torre (pictured), chief executive of the BBB.
“This evaluation is the first indication of just how important those schemes were in saving livelihoods, businesses and hundreds of thousands of jobs, and we are proud to have played a vital role in their delivery.”
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“As the pandemic first took hold, FSB campaigned hard to get as much support for as many small businesses and self-employed as possible,” said Martin McTague, national chair of the Federation of Small Businesses.
“The emergency loans were among the most important lifelines, and the British Business Bank (BBB) worked collaboratively and effectively with us to make sure there was a guaranteed finance option for even the smallest of businesses.
“As today’s findings demonstrate, this swift action prevented vast numbers of businesses from going under; protecting jobs, livelihoods, and enabling these firms to be part of the economic recovery.”
“The Covid loan schemes made critical difference to businesses of all sizes across every region and nation of the UK,” said Chris Wilford, director of financial services policy at the CBI.
“Without this vital lifeline, hundreds of thousands of otherwise viable businesses, jobs and livelihoods would have been lost.
“The tireless work of the government, the BBB and lenders throughout the crisis really mattered. It is important we build on this collaboration as we face into future challenges.”