A majority of small businesses (55%) that have received the UK government’s rebound loan program (BBLS), which was launched specifically to help those affected by the coronavirus pandemic, were used to “adapt and grow, “a new report revealed.
Research from Enterprise Nation and Starling Bank suggests that BBLS has played a role “beyond mere survival in the face of the pandemic.” Enterprise Nation like Bridge., which provides support and advice to small businesses, surveyed 850 of its members. Respondents were asked a series of questions about their borrowing, including BBLS, over the past year.
While a third (36%) of SMEs used their BBLS loan to pay their bills, 35% kept funds in reserve and 27% used the cash to invest in their business.
This investment includes the introduction of new products and services (27%), the introduction of new technologies (13%), the upgrading of staff and retraining of staff (13%) or the intensification of marketing efforts. (24%).
Small businesses can borrow up to £ 50,000 ($ 68,804) under the scheme, which was set up in May to help businesses struggling due to the COVID-19 pandemic. Bounce Back loans are 100% government guaranteed, which means taxpayers are at the mercy of losses and there will be no fees or interest payable for the first 12 months.
After 12 months, the interest rate will be 2.5% per annum. The program is open for applications until March 31, 2021.
The eligibility criteria, according to the government website, are that companies applying for the loan must be UK-based, established before March 1, 2020, and have been negatively affected by the coronavirus.
Figures from HM Treasury show more than 1.53 million rebound loans have been approved since the program began, with £ 46.5 billion loaned to a small business – around £ 30,000 per business.
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Among respondents, almost half (48%) said having the funds in reserve gave them peace of mind during a difficult time and / or gave them greater confidence to innovate, adapt or diversify their business. business (36%).
Of the small businesses surveyed, 18% reported “significant growth” in the loan and 37% said the loan provided some return.
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Emma Jones, founder of Enterprise Nation, said, “What this research shows is the resilience of small businesses. Although many took out a loan for the first time, they put the funds to good use. The money allowed them to confidently pivot, introduce new products and services such as online ordering systems or strengthen their e-commerce offering and improve their online marketing. ”
“It must be a relief for the government to hear,” she added.
The study also indicates that interest in the government’s new stimulus loan program is high, with seven in 10 small business owners who took out a bounce loan (70%) saying they would consider applying. or the equivalent of one in four SMEs (25%).
The new program ensures that businesses of all sizes can continue to access loans and other types of financing up to £ 10million per business once existing COVID-19 loan programs are closed.
In December, UK bank bosses told MPs they were seeing Bounce Bank loan fraud rate about five times higher than normal.
The rough figure suggests that fraudsters could earn up to £ 420million from the loans, which are 100% government guaranteed. A senior manager at HSBC (HSBA.L), the criminals specifically targeted the system, including posing as suppliers of PPE.
And earlier in October, the government said it feared losing up to £ 23 billion on the Bounce Back loans.
The Ministry of Business, Energy and Industrial Strategy said loss rates on the coronavirus loan program could be between 35% and 60%.