Evaluation of the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and Coronavirus Large Business Interruption Loan Scheme

In March 2020, in response to the global pandemic, the government deployed a series of three loan-guarantee schemes for businesses: the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Bounce Back Loan Scheme (BBLS). These aimed to support smaller businesses across the UK which were experiencing lost or deferred revenues, leading to disruptions to their cashflow. Ipsos, together with London Economics were appointed to undertake a multi-year evaluation of the three schemes.

This is an early assessment of the impact of the Covid-19 loan guarantee schemes, and will be refined as more data becomes available and the medium- to long-term impacts of the schemes become clearer. The first phase of the evaluation have found:

• It is estimated that in the absence of the Covid-19 loan guarantee schemes, an additional 10%-34% of BBLS borrowers (146,000 to 505,000 businesses) and an additional 7%-28% of CBILS/CLBILS borrowers¹  (5,000 to 21,000 businesses) could have permanently ceased trading in 2020.
• It is also estimated that 0.5 million to 2.9 million jobs could have been lost in the absence of the schemes
• The most common uses of the funds were working capital and to provide financial security
• Common actions undertaken by borrowers since raising external finance from one of the schemes included the adoption or expansion of digital technologies, innovation activities or building business resilience.
• The Covid-19 loan guarantee schemes met their primary objectives of unlocking credit for businesses at scale and speed and resulted in £78bn in guaranteed loan facilities, reaching just over a quarter of smaller businesses² in the UK³.
• Loans were generally either used to fund operational expenses or to boost reserves and resilience to unexpected shocks, and guaranteed lending may have had a significant protective effect
• The introduction of BBLS helped ease pressure on lenders and accelerated timescales for loan approvals
• 270,000 Bounce Back Loans were issued in the first week, and close to 800,000 in the first month. Had lenders conducted their standard checks on such a volume of applications, it would have created an extensive backlog with smaller businesses waiting significantly longer for a loan during which period the survival of the business may have been at risk.