Banks have provided £27.5 billion of emergency lending to more than 650,000 businesses, official figures show.
A performance update from the Treasury for its three credit programmes for companies hit by the Covid-19 pandemic underlines the unprecedented level of debt being issued to small and medium-sized companies.
UK Finance, the banking industry trade body, said that hundreds of thousands of facilities had been approved in the two months since the first coronavirus loan scheme was launched by the government.
State-backed lending schemes have provided more than £5.4 billion to almost 150,000 businesses in the past week alone.
The bounce back loan scheme, aimed at sole traders and small companies seeking to borrow up to £50,000, is responsible for £18.5 billion of loans.
Banks receive a guarantee from the government to underwrite the enormous credit risks the scheme entails.
The programme was introduced after complaints that the coronavirus business interruption loan scheme, the original emergency lending initiative, was taking too long to get money to the front line.
The scheme, which provides lenders with an 80 per cent guarantee on loans of up to £5 million, has provided £8.2 billion to 43,000 businesses. The interruption loan scheme for larger businesses has provided a further £820 million to 154 organisations.
The CBI said the bounce back loans were “getting to many smaller businesses in their hour of need”, while “the [rise] in larger firms receiving funds is keeping many afloat and saving jobs”.
However, Rain Newton-Smith, chief economist of the CBI, said that some high-growth and larger companies were still struggling to access loans.
The figures were published as research from accountants found that one in four companies claim to be unable to access enough cash to survive another two weeks of lockdown. A survey of accountants representing 1,800 companies said that they expect one in twenty of the businesses to dissolve as a result of financial strain. The study was conducted by the Association of Chartered Certified Accountants and the Corporate Finance Network, a regional accountants’ group.
