Commons Sense

House of Commons · Ministers' Questions

Bounce Back Loan Scheme

Tuesday 1 December 2020 · 4 questions

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Answered 0 Partly answered 4 Not answered 0

Key points

  • As of 15 November, the scheme has supported nearly 1.4 million businesses with facilities totalling over 42 billion.
  • The Government encourages lenders to open when possible, and nine have opened for a period with two currently open.
  • The Government considers the burdens faced by small businesses and introduced additional measures beyond bounce back loans.

Topics (select to filter)

Questions & Answers

Q1 Kevin Hollinrake Con Thirsk and Malton
Business & Trade
Context

The MP references the success of the Bounce Back Loan Scheme but highlights a research report indicating that approximately 250,000 businesses were locked out due to banking with non-bank lenders. The scheme closes in January.

Question

What recent estimate has been made of the number of loans provided through the bounce back loan scheme? According to research, about 250,000 businesses were unable to access the scheme because they banked with non-bank lenders and banks have limited appointments until January. What action is being taken to address this issue?

Answer from John Glen

As of 15 November, the scheme has supported nearly 1.4 million businesses with facilities totalling over £42 billion. While we cannot force lenders to open to new customers, nine have opened for a period and two are currently open for limited services. The Chancellor extended the scheme to January 31, followed by a new guarantee scheme.

Partly answered

Not addressed: The exact action being taken to address businesses banking with non-bank lenders was not specified

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Q2 Kevin Hollinrake Con Thirsk and Malton
Business & Trade
Context

The MP acknowledges the success of the scheme but raises concerns about businesses that were unable to access it due to banking with non-bank lenders. The research indicates a significant number are locked out.

Question

Following the success of the bounce back loan scheme, what action is being taken to address the issue of 250,000 businesses being locked out because they banked with non-bank lenders and banks have limited appointments until January?

Answer from John Glen

The Government encourages lenders to open when possible, and nine have opened for a period with two currently open. The Chancellor extended the scheme until January 31st followed by a new guarantee scheme.

Partly answered

Not addressed: Specific measures to address businesses banking with non-bank lenders were not provided

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Q3 Pat McFadden Lab Wolverhampton South East
Business & Trade
Context

The MP praises small businesses for their contribution to the economy during a tough year. The Bounce Back Loan Scheme has helped many but also left some with debts they may not be able to pay off.

Question

This weekend marks Small Business Saturday, recognizing the work of small businesses. With ongoing pandemic challenges, what is the Government's estimate for the likely default rate on bounce back loans? What additional support can be provided to businesses struggling due to continued economic hardship?

Answer from John Glen

The Government considers the burdens faced by small businesses. The repayment period starts May next year, with an option to extend payment terms up to 10 years. We monitor these issues closely and have introduced additional measures beyond bounce back loans.

Partly answered

Not addressed: Specific default rate estimates were not provided

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Q4 Meg Hillier Labour (Co-op) Hackney South and Shoreditch
Economy Business & Trade
Context

The MP questions the Government about potential default rates on bounce back loans and whether extending payback periods will reduce these risks. Concerns are raised about taxpayer implications.

Question

Has a calculation been made about how extended payment terms might affect the up to 80% expected potential for loan defaults, which poses significant financial burdens on taxpayers?

Answer from John Glen

Estimates vary due to data challenges. We prioritise protecting businesses and jobs through this intervention, considering fraud risks. A mitigation strategy is being developed with the Cabinet Office and British Business Bank.

Partly answered

Not addressed: Specific calculations about default rates were not provided

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