Thousands of small businesses have applied for the government’s new coronavirus support loans within the first few hours of launching.
The government’s ‘Bounce Back’ loan scheme officially launched on Monday, offering small businesses 100% state-backed loans of up to £50,000 ($62,000).
Major high street banks are underwriting the loans and online application forms went live on Monday morning. Executives said they were already seeing “significant” demand for the new loans.
Matt Hammerstein, chief executive of Barclays Bank UK (BARC.L), told the Treasury Select Committee his bank had received 200 applications in just the first minute.
David Oldfield, CEO of commercial banking at Lloyds Bank (LLOY.L), said Lloyds had received 5,000 applications by 10am.
“We expect really quite significant volumes flowing through to the Bounce Back loans,” Oldfield told the Treasury Select Committee.
Hammerstein said: “I think there will be extraordinary demand.”
Chancellor Rishi Sunak announced the new ‘Bounce Back’ loan scheme just seven days ago. The programme was launched in response to criticism that existing government support was taking too long to reach small businesses.
Coronavirus business interruption loans (CBILs) were launched in March to support companies through the COVID-19 pandemic. The scheme required banks to asses a business’ viability before the crisis and ability to repay loans after the pandemic. Critics said these checks led to delays and high levels of rejected applications.
“The business interruption loan scheme has started to reach the front line, but small firms have still been having difficulty accessing finance,” said Tej Parikh, chief economist at the Institute of Directors.
Oldfield told MPs the Bounce Back scheme was “built around simplicity.”
“Whatever someone applies for within that range, subject to it being no more than 25% of turnover, then we will do no further checks other than the fraud checks,” he said.
Businesses will only be asked about their turnover, business details, and the amount being requested under the ‘Bounce Back’ scheme.
Hammerstein said the 200 applications Barclays’ received were approved “within minutes” and money should reach business-owners “over the course of the next 24 hours”.
Amanda Murphy, head of commercial banking UK at HSBC (HSBA.L), said there was still some “confusion” over the fact that business-owners would still be on the hook for money borrowed under the ‘Bounce Back’ scheme.
“It is a loan, it’s not a grant,” Murphy told MPs.
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