Just 6,000 of 28,000 Coronavirus business interruption loan applications approved to date
Despite many UK firms facing collapse, only 0.6% have been approved for a loan since scheme was announced in March
Just 6,000 of the 28,000 applications to the government-backed Coronavirus Business Interruption loan have been approved so far, equating to 21% of applications, but only 0.6% of UK businesses.
This is despite the fact that 17% of the UK’s 5.9 million small businesses only have enough cash reserves to last a month.
Announced by chancellor Rishi Sunak in March, the scheme offers eligible businesses a loan of up to £5m. Any UK business with an annual turnover of less than £45m is eligible.
The cash has been distributed to lenders in a bid to encourage them to support struggling businesses, with the government covering up to 80% of the value of the loan.
To date, more than £1.1bn has been lent through the scheme, at an average value of £185,000 per loan.
But critics have said that the loans are being approved too slowly, with many apparently eligible businesses rejected after weeks of trying.
Former Labour leader Ed Miliband has described the scheme as inadequate, urging the chancellor to move to guarantee 100% of loan value for smaller businesses.
The loan scheme was part of a £330bn relief package pledged to small businesses by Sunak. Very small businesses that are eligible for business rates relief can access a £10,000 grant, and any business with furloughed employees can apply for the Coronavirus job retention scheme, which covers 80% of an employee’s salary.
Speaking to BBC News, John Glen MP, economic secretary to the Treasury, said: “We are very aware of the need to make this scheme work more quickly. We’re very pleased that the banks have doubled the number of loans that they’ve processed… there’s more to be done and it’s absolutely critical that that pace continues to pick up.
“We expect the numbers to double every 48 hours and the government are looking very carefully at other models to make sure that we get to the businesses that we want to help.”
Bryn Glover, editor of Startups.co.uk, commented: ‘This is probably the most testing period we’ve experienced in our lifetime for small businesses. The initial measures and promises made by the government seemed like that lifeline many businesses needed.
“However, in reality, the acceptance rate for the loan is incredibly low, and the application rate is even lower. Something is broken and we need the government to step in with new measures before we lose even more small businesses.”
- Find out how to apply for a Coronavirus Business Interruption Loan here.
- Find out how to apply for the Coronavirus Small Business Grant here.