News

Second year evaluation of Covid-19 loan schemes finds self-reported high impact on businesses saved, and positive impact on turnover and employment elsewhere

  • Self-reported year two survey data suggests that between 175,000 and 618,000 BBLS borrowers could have permanently closed between April 2020 and December 2021 in the absence of the schemes.
  • The survey data also suggests that between 4,000 and 25,000 CBILS/CLBILS borrowers could have permanently closed between April 2020 and December 2021 in the absence of the schemes.
  • Further analysis finds positive impact on borrowers’ turnover and employment.

In the second in a series of reports evaluating the government’s Covid-19 emergency loan schemes, business responses continue to support first year findings that hundreds of thousands of jobs could have been lost without the £78bn of funding guaranteed under the schemes.

This second report is part of a multi-year evaluation of the three schemes which the British Business Bank commissioned from London Economics and Ipsos. The second phase of the evaluation (.docx, 2mb), published today, provides an updated assessment of whether the objectives of the schemes were satisfied and their impact, as well as a process evaluation.

In March 2020, in response to the global pandemic and corresponding wide-ranging business impacts and uncertainty, the government rapidly designed and deployed a series of three loan-guarantee schemes – 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 businesses across the UK which were experiencing lost or deferred revenues, leading to disruptions to their cashflow.

Self-reported survey data

In the first analysis conducted for this report, borrowers were again surveyed about the impact of the schemes on their survival two years on from the pandemic, as they had been the previous year.

Analysis of these self-reported impacts suggests that between 175,000 and 618,000 BBLS, and between 4,000 and 25,000 CBILS/CLBILS borrowers could have permanently closed between April 2020 and December 2021 in the absence of the schemes. This compares to 146,000 to 505,000 BBLS, and 5,000 to 21,000 CBILS/CLBILS borrowers reported in the year one evaluation.

Secondary IDBR data

A further analysis was undertaken using a different methodology and data set to look at first-year impacts. This used an econometric analysis of secondary data from the Inter Departmental Business Register (IDBR) rather than by directly surveying borrowers.

This suggests that the schemes prevented closures of between 74,000 and 96,000 of BBLS and 3,000-3,500 of CBILS/CLBILS borrowers from April 2020 to March 2021.

While these impacts are statistically significant, they are lower than businesses’ self-reported estimates from the year one evaluation, particularly for BBLS. It is possible that business closure rates in the counterfactual group for this analysis may be artificially low due to temporary measures introduced during the pandemic which may have delayed the closure of certain businesses.

For businesses that would have continued trading regardless of the schemes, the analysis found that turnover was between 9.7% and 11.5% greater for BBLS and CBILS/CLBILS borrowers respectively in the first year of the pandemic than it would have been in the schemes’ absence.

Process Evaluation

The year two evaluation also includes a process evaluation focused on monitoring, counter-fraud processes and repayment. Key findings include:

Monitoring

  • Lenders and stakeholders felt an appropriate level of information was shared to enable monitoring of the schemes’ portfolios.
  • The lender audit was seen as an appropriate and proportionate mechanism for a publicly supported scheme of this size.

Counter-fraud activities

  • Both stakeholders and accredited lenders reported that the additional suspected fraud modelling work undertaken by the British Business Bank, the Department for Business and Trade and the Cabinet Office was beneficial, and added value in supporting a stringent assessment of suspected fraud activity.
  • Enforcement activities undertaken by the Insolvency Service have overcome some initial resource and administrative challenges and are reported to be delivering in line with expectations.

Because of editorial deadlines, repayment data in this report is as of 30 June 2023. Newer data, as of 30 September 2023, is now available on the gov.uk website.

The year three report will complete the process evaluation and provide estimates of the longer-term impacts of the schemes on turnover, employment and business survival.

It will explore whether different kinds of borrowers experienced different changes in turnover and employment and examine in more detail why scheme finance was important in preventing business closures. Additionally, it will provide an indication of the value for money of the schemes.

ENDS

Media Contacts

If you are a journalist and have a media enquiry, please contact mediaenquiries@british-business-bank.co.ukLink opens in a new window

Notes to editors

About the British Business Bank

The British Business Bank is the UK government’s economic development bank. Established in November 2014, its mission is to drive sustainable growth and prosperity across the UK and to enable the transition to a net zero economy, by improving access to finance for smaller businesses. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.

The British Business Bank is the UK government’s economic development bank. Established in November 2014, its mission is to drive sustainable growth and prosperity across the UK and to enable the transition to a net zero economy, by improving access to finance for smaller businesses. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.

The British Business Bank’s core programmes support over £12.4 billion ¹ of finance to more than 90,000 smaller businesses ².

As well as increasing the supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of finance options available to smaller businesses. The British Business Bank Finance Hub provides independent and impartial information to businesses about finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success.

The British Business Bank is also responsible for administering the government’s three Coronavirus loan schemes and its Future Fund, together responsible for delivering £80.4 billion in finance to 1.67 million businesses. These schemes are now closed to new applications.

British Business Bank plc is a public limited company registered in England and Wales, registration number 08616013, registered office at Steel City House, West Street, Sheffield, S1 2GQ. Wholly owned by HM government, the Bank and its subsidiaries are not banking institutions and do not operate as such. They are not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). A complete legal structure chart for the group can be found at the British Business Bank.

Research methodology

Research was undertaken by London Economics and Ipsos MORI from 18 August to 14 October 2022 of 440 borrowers and 521 non-borrowers.

References:

¹ Figures as at the end of March 2023
² Figures as at the end of March 2023