British Business Bank responds to National Audit Office Report on Bounce Back Loans
The National Audit Office (NAO) has today published its report – The Bounce Back Loan Scheme: an update.
The British Business Bank stepped up to deliver the Bounce Back Loan Scheme on behalf of government to ensure access to finance was available at pace and at scale during the pandemic. The Bank made 28 lender accreditations through which it delivered £47.36 billion of essential financial support to over 1.56m businesses – more than 25% of the UK’s smaller business population. The Bank ensured that key counter-fraud measures consistent with the self-certification design of the scheme were in place from the outset.
Catherine Lewis La Torre, CEO, British Business Bank, said:
“The Bank welcomes the NAO’s findings that ‘most of the loans – over 90%, or £39.7 billion – went to micro-businesses’ and that ‘businesses have found the loans useful to address cashflow shortages during the pandemic’. This is supported by the Bank’s own research which finds ‘that about 70% used the funds for working capital and day-to-day expenses.’
“The Bank also welcomes the finding that ‘most businesses have started to repay loans’, evidenced by recent data published by the Department for Business, Energy & Industrial Strategy (BEIS) and the Bank, showing the overwhelming majority of businesses are meeting their monthly repayments.
“From the launch of the scheme, the British Business Bank has worked with lenders and across government to prevent, detect and counter fraud and put in place as quickly as possible additional measures to further mitigate fraud risks.”
The Bank is working with accredited lenders to ensure they fulfil their regulatory obligations along with their contractual commitments under the terms of the Guarantee Agreement, to recover the loans and tackle fraud. Lenders are deploying significant additional counter-fraud resource in support of these efforts.
Notes to Editors
About the Bounce Back Loan Scheme
The Bounce Back Loan Scheme was a demand-led scheme offering lending that targets small and micro businesses, providing loans from £2k up to 25% of the business’ turnover with a maximum loan of £50k. Providing lenders with a 100% government-backed guarantee and standardising the application form led to a faster process with many loans becoming available within days. The Bounce Back Loan Scheme enabled businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year. The government covered interest payable in the first year. The scheme closed on 31 March 2021.
Reservation Notice and Ministerial Direction for the Bounce Back Loan Scheme
In advance of the Bounce Back Loan Scheme being launched on 4 May 2020, the British Business Bank issued a Reservation Notice on 2 May 2020, which raised concerns regarding the propriety, value for money, and feasibility of the Bounce Back Loan Scheme.
The Notice took the form of a letter, from Keith Morgan CBE, (former) Chief Executive Officer & Accounting Officer, British Business Bank, written on behalf of the Board, to the Bank’s sole Shareholder, the Rt Hon Alok Sharma MP, (former) Secretary of State, Department for Business, Energy & Industrial Strategy (BEIS).
The subsequent Written Direction letter from Sam Beckett (former) Permanent Secretary, Department for Business, Energy & Industrial Strategy & Principal Accounting Officer to Keith Morgan CBE, (former) Chief Executive Officer & Accounting Officer, set out the ministerial direction.