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Beyond rescue

Firms use government Covid loans to fund growth

Emma Jones, Enteprise Nation

Emma Jones: funds have been put to good use (pic: Terry Murden)

More than half of British businesses (55%) which took out a Covid rescue loan to adapt and grow, according to a new report.

It suggests that the Bounce Back Loan Scheme (BBLS) has played a role beyond surviving the pandemic.

While a third (36%) of small and medium-sized enterprises (SMEs) have used their BBLS loan to pay the bills, 35% have kept funds in reserve and one in four (27%) have used the cash to invest in their business.

This investment includes introducing new products and services (27%), bringing in new technology (13%), upskilling staff and retraining staff (13%) or increasing marketing efforts (24%).

Enterprise Nation, which produced the report with Starling Bank, surveyed 850 of its members. Respondents were asked a range of questions about their borrowing, including BBLS, in the last year.

Among the respondents, nearly half (48%) said that having the funds in reserve gave them peace of mind during a difficult time and/or gave them greater confidence to innovate, adapt or diversify their business (36%). 

Of the small businesses surveyed 18% reported ‘significant growth’ from the loan and 37% said the loan provided a degree of return.

The study also indicates that interest in the government’s new Recovery Loan Scheme is high, with seven in 10 SME owners who took out a Bounce Back Loan (70%) saying they would consider applying – equivalent to one in four SMEs (25%).

Helen Beirton, chief banking officer at Starling Bank, said: “Bounce Back Loans have been a lifeline for SMEs. Not only have the funds allowed them to pay the bills and maintain crucial supply chains but it has enabled them to find the funds to flex their business model and better ride the wave of the pandemic.”

Figures from HM Treasury show that more than 1.53m Bounce Back Loans have been approved since the scheme was launched last May, with £46.5bn lent to small enterprise – approximately £30,000 per business.2 Starling has lent over £1.58bn in BBLS to over 53,000 limited companies and sole traders.

Emma Jones, founder Enterprise Nation, said: “What this research shows is the resilience of small firms. Despite many having taken on a loan for the first time, they have put these funds to good use. 

“The money has allowed them to confidently pivot, introduce new products and services such as online ordering systems or boost their e-commerce provision and enhance their online marketing.  This must be a relief for the Government to hear.”

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