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Final bill for UK's COVID support loans hits £80bn

·2-min read
Chancellor of the Exchequer Rishi Sunak delivers his 'Mansion House' speech at the Financial and Professional Services Address, previously known as the Bankers dinner, at Mansion House in London, Britain July 1, 2021. Stefan Rousseau/Pool via REUTERS
Chancellor of the Exchequer Rishi Sunak delivers his 'Mansion House' speech at the Financial and Professional Services Address, previously known as the Bankers dinner, at Mansion House in London, Britain July 1, 2021. Stefan Rousseau/Pool via REUTERS

The UK government spent £80bn ($100.8bn) supporting businesses through COVID-19 loans, according to the final official calculations.

The Treasury said on Tuesday that banks had extended 1.6m loans to businesses under government-backed support schemes such as Bounce Back loans, Coronavirus Large Business Interruption Loans (CLBILS), and the Future Fund. The various schemes were stood up at short notice last year to give businesses access to quick, cheap cash to keep them afloat during the worst stages of the pandemic.

The first loan schemes were opened in March 2020 and closed on 31 March 2021. Lenders participating in the programmes had until the end of May to finish processing applications.

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Bounce Back loans made up the majority of lending, with more than £47bn doled out under the banner last year. The scheme allowed small businesses to borrow up to £50,000 with minimal checks. The loans are 100% state-backed.

£26bn was provided via Coronavirus Business Interruption Loans (CBILS) and over £5bn worth of Coronavirus Large Business Interruption Loans (CLBILS) were offered.

A further £1.12bn of funding has been provided to 1,140 high growth firms through the Future Fund. The scheme, which closed on the 31st January, was designed to support innovative UK companies that typically rely on equity investment rather than debt.

“I am proud of the extraordinary extent of support we’ve offered since March last year – we will continue to back businesses and protect people’s jobs as we recover from coronavirus,” UK chancellor Rishi Sunak said in a statement.

The loan support total does not include wage subsidies provided by the government through the furlough scheme. The Treasury has spent over £65bn paying people's wages under the scheme.

Read more: UK faces triple threat from pandemic, climate change and ballooning debt

Businesses can continue to access government-backed loans through the new Recovery Loan Scheme, which opened in April and runs until the end of the year. Startups will also have access to the new Future Fund: Breakthrough scheme, which is due to launch later this month. Both offer less generous terms than last year's equivalents.

Businesses also continue to benefit from furlough, business rates and VAT relief, and an extended moratorium on commercial evictions.

The government has introduced the Pay as You Grow scheme to support businesses repaying coronavirus loans. Businesses can pause repayments for up to six months and extend their repayment periods from six to ten years.

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