Originally written by Timothy Adler on Small Business
Nearly two thirds of Bounce Back Loans, designed to help small businesses survive Covid-19, may never be repaid, says the government.
The business department in its latest set of accounts says that up to 60 per cent of Bounce Back Loans, hurriedly introduced in July, could go bad.
If so, that could mean the taxpayer having to find over £20bn to cover small business loans which have defaulted.
>See also: Small businesses have average of just £9,000 left from Bounce Back Loan
The Bounce Back Loan Scheme (BBLS) provides private sector lenders with a 100-per-cent state guarantee on low-interest loans to small companies. It has underwritten £38bn of credit to 1.3 million companies to date.
Overall, the taxpayer faces losses of as much as £23bn so far in bad loans across all the state coronavirus emergency bailout schemes.
Vulnerable to abuse
Yesterday, it emerged that ex-British Business Bank (BBB) CEO Keith Morgan wrote to business secretary Alok Sharma in May, warning that the schemes risked wasting taxpayers money.
Mr Morgan said: “The scheme is vulnerable to abuse by individuals and by participants in organised crime.”
A draft review by PwC had classified the risk of fraud as “very high”, he added.
The BBB, which
Tag Archive for Future Fund
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Rishi Sunak to extend government coronavirus business support
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Chancellor Rishi Sunak is set to extend all four of the UK’s emergency coronavirus business support schemes until the end of November.
Until now, the Treasury has resisted calls from business groups to extend the Coronavirus Business Interruption Loan Scheme (CBILS), in particular. The CBILS is due to expire at the end of October with the Bounce Back Loans scheme following shortly thereafter in November.
However, given this week’s expected further semi national lockdown, according to the Financial Times, the chancellor has bowed to the inevitable in extending all coronavirus business support schemes, which have already backed £53bn in lending to business through government guarantees.
Second national lockdown
The news comes as a thinktank warns that a second national lockdown would cost the economy £250m a day as people are kept out of pubs and restaurants and encouraged to work from home.
The Centre for Economics and Business Research (CEBR) warned that GDP could fall by between 3 per cent and 5 per cent in the last three months of this year compared with the third quarter.
Although the £250m figure is a tenth of the impact of the full-blown lockdown at its peak in April, CEBR deputy chairman
Hot Business News Today
Rishi Sunak to extend government coronavirus business support
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Chancellor Rishi Sunak is set to extend all four of the UK’s emergency coronavirus business support schemes until the end of November.
Until now, the Treasury has resisted calls from business groups to extend the Coronavirus Business Interruption Loan Scheme (CBILS), in particular. The CBILS is due to expire at the end of October with the Bounce Back Loans scheme following shortly thereafter in November.
However, given this week’s expected further semi national lockdown, according to the Financial Times, the chancellor has bowed to the inevitable in extending all coronavirus business support schemes, which have already backed £53bn in lending to business through government guarantees.
Second national lockdown
The news comes as a thinktank warns that a second national lockdown would cost the economy £250m a day as people are kept out of pubs and restaurants and encouraged to work from home.
The Centre for Economics and Business Research (CEBR) warned that GDP could fall by between 3 per cent and 5 per cent in the last three months of this year compared with the third quarter.
Although the £250m figure is a tenth of the impact of the full-blown lockdown at its peak in April, CEBR deputy chairman
Hot Business News Today
Future Fund – government tech start-up bailout scheme how it works
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
UPDATED: The government has announced its £250m Future Fund tech start-up bailout scheme to help innovative companies get through the coronavirus pandemic.
The widely anticipated Future Fund will issue convertible loans between £125,000 to £5m to innovative companies that are facing financing difficulties due to the Covid-19 outbreak. These loans will have to be matched by private investors.
>See also: Government eyes taking equity stakes in tech start-ups
These loans will be for three years and will be charged at an interest rate of 8 per cent.
Crucially, the government could end up owning half of some of Britain’s fastest-growing tech businesses. Future Fund loans may convert to equity at a discount of at least 20 per cent when companies undergo their next funding round.
This scheme will launch in May 2020, which may be too late for some start-ups reliant on investors to survive. Investment through government tax schemes such as the Enterprise Investment Scheme has dropped by 70 per cent this year.
Chancellor Rishi Sunak has charged British Business Bank with delivering the Future Fund.
See also: How do I apply for a Coronavirus Business Interruption Loan?
The news will go some way to allaying tech start-up fears that