By Anna Jordan on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Defaults on the government’s Bounce Back Loan scheme are set to total up to £5bn – much lower than the previous tens of billions expected.
The estimates from officials and bankers come from an assessment based on the first few months of debt servicing. So far, it shows that between five per cent and ten per cent of SMEs that used the Bounce Back Loan scheme have missed out on repayments.
>See also: Nearly two thirds of Bounce Back Loans could go bad, says government
Bankers said that the expected recovery from Covid-19 helped companies regain their financial independence. One banking executive said that five per cent were already repaid in full on the date that the 12-month interest-free payment ended, saying that not all of the loans were taken out of desperation, but out of caution.
However, some bankers feel they could have pushed back the worst of the issues through its ‘pay as you grow’ scheme, offering repayment holidays of up to six months as well as extended loan terms of up to ten years.
Last year the government predicted that between 35 per cent and 60 per