The UK’s biggest banks have been inundated with requests from small businesses for new coronavirus “bounce-back loans”, with HSBC receiving 12,800 applications in the first few hours of the scheme.
The government’s newest coronavirus lending scheme launched today and offers the UK’s smallest companies loans worth 25 per cent of turnover, up to £50,000, just 24 hours after applying for them. The loans are available through 10 accredited lenders and 100 per cent guaranteed by the government.
The initiative was created after criticism of the flagship coronavirus business interruption loan scheme (CBILS), which offers bigger loans to firms of all sizes. Companies said banks were reluctant to lend without a full state guarantee.
For the bounce-back loans scheme, banks do not have to undertake “forward-looking viability checks” and the government takes on all the default risk.
After opening this morning, banks have seen a surge in demand from small businesses looking to shore up their finances amid the coronavirus lockdown. HSBC had received 12,830 applications by midday.
Earlier this morning, Barclays UK chief executive Matt Hammerstein told a House of Commons committee today that his bank received 200 applications within minutes of the emergency scheme opening at 8am.
“We’ve seen applications of about 35 per minute even as we sit here during this session,” he told the Treasury Committee.
avid Oldfield, group director and chief executive of commercial banking at Lloyds Bank, said his firm had received 2,000 applications within the first two hours of the scheme’s opening.
Santander reported a surge in demand and said it had already provided money to at least one customer.
The rush into the loan scheme highlights the huge strain Britain’s smallest businesses are under. Lockdown measures have broken supply chains and caused demand to all but evaporate.
Commenting on the launch of the bounce-back loans scheme, Institute of Directors chief economist Tej Parikh said: “The business interruption loan scheme has started to reach the front line, but small firms have still been having difficulty accessing finance.”
“This additional measure should help more of those firms get the cash they need to see them through the weeks and months ahead.”
Original source City AM
