Government Loan Schemes
About this good practice
In early 2020, the Government established three schemes to provide loans to UK businesses affected by the Coronavirus pandemic to support them with cashflow until they were able to return to full revenue and profit generating capacity. These were:
- The Coronavirus Business Interruption Loan Scheme (CBILS), launched on 23 March 2020, offered loans of up to £5m to SMEs with a turnover up to £45 million and adversely impacted by the coronavirus. The loans were 80% backed by the Government.
- The Coronavirus Larger Business Interruption Loan Scheme (CLBILS), launched on 23 March 2020, offered loans of up to £200m to medium and large-sized businesses with a turnover over £45 million that were affected by coronavirus and the loan would enable them to trade out of any short-term to medium-term difficulty resulting from coronavirus. The government guaranteed 80% of the finance to the lender.
- Bounce Back Loans (BBLS), launched on 4 May 2020, were loans up to £50,000 to enable SMEs, established before 1 March 2020 and adversely impacted by the coronavirus, to access finance more quickly. The loans were 100% backed by the Government.
They were all overseen by the British Business Bank, a government-owned business development Bank that accredited lenders for each of the schemes. Businesses from all sectors applied and many from the transport sector received loans.
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The three schemes disbursed over £79 billion through loans and similar facilities. The funds were all established by the UK Government.
7,400 Coventry businesses were able to access a total of £304.3m from these loans, as well as 15,000 Warwickshire businesses being able to access £655.5m in loans.
Evidence of success
All sectors received loans. In particular, the Transportation and Storage sector received a total of 3,238 CBILS loans, for the value of £694,930,852. This represents 4% of offered facilities and 5.8% of business population involved. The sector received also a total of 77,920 BBLS loans, for the value of £2,070,750,535. This represents the 5% of offered facilities and 5.8% of business population involved.
Potential for learning or transfer
These schemes helped many businesses to survive the challenges of the pandemic and helped to save many jobs that would otherwise have been lost, triggering a severe and prolonged spike in unemployment. A key learning point was the need to rapidly design such interventions when faced by a pandemic, to incorporate the views of business representative bodies when designing the loans, to make the loan funds flexible in terms of size and also allow all industrial sectors to apply, to make application processes swift and simple, and to also complement other grant funding offers that were available.
They have also been important in informing the design of subsequent loan schemes, notably the Recovery Loan Scheme, launched in April 2021. This is open to businesses of any size to support them to access loans and other kinds of finance so they can recover after the pandemic and transition period. It is expected to run until 30 June 2022.
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