Evaluation of the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and Coronavirus Large Business Interruption Loan Scheme (British Business Bank)

Summary

• The Covid-19 Loan Guarantee Schemes provided £78bn in guaranteed loan facilities, reaching just over a quarter of SMEs across the UK.p.11
• In the absence of the schemes, an estimated additional 146,000 to 505,000 BBLS borrowers (10%-34%) and 5,000 to 21,000 CBILS/CLBILS borrowers (7%-28%) could have permanently ceased trading in 2020.p.13
• An estimated 0.5 million to 2.9 million jobs were preserved that could otherwise have been lost in the absence of the loan guarantee interventions.p.13
• Finance additionality rates were estimated at 81% for BBLS loans and 77% for CBILS/CLBILS loans.p.13
• Average product market displacement from BBLS and CBILS/CLBILS is estimated to be 43% and 46% respectively.p.14

Key insights

1. The British Business Bank, BEIS, and HM Treasury established CBILS within twelve days of its announcement by adapting the pre-existing Enterprise Finance Guarantee infrastructure.p.9
2. Scheme design adjustments prioritised speed of delivery and broader access by removing standard requirements for businesses to prove inability to obtain commercial funding.p.10
3. BBLS achieved rapid deployment by approving 270,000 loans in its first week and close to 800,000 in its first month using automated self-certification processes.p.11
4. Econometric analysis focusing on surviving businesses found no statistically significant net impacts of loan receipt on turnover or employment growth.p.13
5. The average time taken for businesses to access funds was two weeks under BBLS compared to five weeks for CBILS/CLBILS borrowers.p.21
6. Borrowers reported a reduced likelihood of seeking external finance over the next three years, primarily due to unwillingness to add further debt to balance sheets.p.23