MPs have called for the government to set up a replacement for the bounce back loan scheme (BBLS) as soon as possible as many lenders are closing for applications.
27 out of the 28 lenders eligible to deploy funds through the 100 per cent government-backed loan scheme have shut their doors to new customers, according to a report in City A.M., even though Chancellor Rishi Sunak (pictured) has extended the deadline for BBL applications from 4 November to 30 November.
Last month, when launching his Winter Emergency Plan, Sunak said the Treasury is starting work on a new, successor loan programme to the current support schemes, set to begin in January 2021.
Peer-to-peer lending platform Folk2Folk has already expressed interest in the new scheme.
Kevin Hollinrake, leader of the all-party parliamentary group for fair business banking, told City A.M. that BBLS should quickly be replaced by a new iteration of the scheme.
“Some [small- and medium-sized enterprises] will go bust off the back of this,” Hollinrake said.
“Cashflow is going to be very tight and there’s no doubt we’re going to have a difficult winter. If we don’t make finance available, then businesses will go bust.”
As of 18 October, more than £40.2bn has been lent to small businesses through BBLS, according to the latest figures from the Treasury.
The scheme has been at the centre of some controversy due to a huge number of predicted defaults and potential fraud.
Darren Jones, chair of the business, energy and industrial strategy committee has raised concerns around BBLS after the British Business Bank warned it could be used fraudulently.
However, business secretary Alok Sharma has said that lenders delivering funds under the scheme conduct fraud checks but deploying finance quickly was a priority.
He has also revealed that the government has been working with the British Business Bank to establish the Fraud Prevention Collaboration Working Group.