Bounce back loans (BBL) are proving to be a more successful route to emergency finance than the coronavirus business interruption loan scheme (CBILS) just a few weeks since launching, research claims.
Analysis by consultancy Rangewell found that the value of loans granted via the BBL scheme has already surpassed the total amount through CBILS.
The BBL scheme launched on 4 May and approved £8.4bn of loans in the first week, while lenders approved just over £1bn in the first seven days of its launch in April.
Almost £15bn has been lent under the BBL scheme, double the amount under CBILS despite going live a month later.
The approval rate under BBL has also been higher, at 79.8 per cent as of 17 May compared with 50 per cent under CBILS, Rangwell said.
As of 17 May, the average size of BBL finance was £30,534 compared with £178,334 under CBILS.
Rangewell has launched its own dashboard to provide regular data on both schemes that shows approval rates and the value of loans, but it is still calling on the Treasury to provide a breakdown by region, sector and lender.
“Although it’s unfashionable to say so, the response from lenders, on the whole, has been highly impressive in terms of the volume of loans they have been able to approve – on the ground, we have seen impressive examples of local managers at all lenders doing everything they can to help their business clients,” Nic Conner, research consultant for Rangewell, said.
“It is important to note that, especially with BBL, participating lenders are not going to profit from the scheme.
“The small size of the loans, substantial administrative costs and the high expected losses that they will have to manage on behalf of the government make that a certainty – in our opinion, their participation should be seen as a genuine effort to step up and help the British economy, as well as reacting to a certain extent to government ‘requests.’
“While the schemes have been a godsend to hundreds of thousands of small businesses to help them cover expenses during the lockdown, we would now encourage the government to start thinking in more detail about the future.
“We see most switched-on businesses now preparing for the next six to 18 months, rather than just on day-to-day survival.
“The government should be thinking and planning alongside them for the next stage of economic recovery.”