Third of companies unable to top up their bounce back loans
More than one in three companies have borrowed the maximum amount allowed under the Government’s bounce back loan scheme, according to new data.
Chancellor Rishi Sunak said companies would be able to top up any loan taken out during the national lockdown in March but 35% had already taken the maximum £50,000 allowed under the scheme.
It means that these businesses will not be able to get more loan money unless they qualify for one of the other Government-backed schemes and could increase pressure on already-struggling businesses.
More than 1.3 million businesses have borrowed £40.2 billion from the Bounce Back Loan Scheme which was launched in May to keep small companies afloat when the UK was in lockdown.
It has proven a lifeline to many firms whose income had dried up and continues to be reduced during the pandemic.
Companies were allowed to take up to 25% of their annual turnover in a Government-backed loan from some of Britain’s biggest lenders.
However if businesses did not take up their full entitlement they could not later top it up with more money.
But that changed last week as England entered a second lockdown and the chancellor said that companies would be allowed to top up their bounce back loans.
However, information released by the British Business Bank after a freedom of information request from the PA news agency shows that many will not be eligible for this extra support.
The data shows that 865,605, or 65%, of the loans taken are for less than £50,000. But many of these loans would have the been the largest that these companies would have been eligible for as their turnover would have only allowed them a maximum loan of less than £50,000.
The British Business Bank said it did not hold data on how many businesses took less money than they were entitled to.
The average value of the bounce back loans taken so far is £30,131.63, but excluding the loans for £50,000, the average falls to £19,556.17.