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Three Risks of the Bounce Back Loan Scheme
BBLS helped to save many businesses through this crisis but what does it mean for banks and lenders? ICAEW’s John Mongelard looks at the risk of bad loans, fraud and misconduct.
By the end of 2020 the BBLS had provided over 1.4 million loans to businesses, totalling £43.54bn. It was launched quickly as it was felt that one third of businesses would not be able to access cash to last even two weeks of lockdown. After its launch £8.4bn was paid in the first week and £21.3bn in the first month. But the lending has been concentrated. Of the 28 eligible lenders, the five largest have provided most (89%) of the loans.
A third of the lending is lending banks would not have done under their own discretion. However, part of the aim of the government schemes was to change the risk appetite of banks and to support businesses.