Covid-19 loan guarantee schemes may have saved between 150,000 and 500,000 businesses and between 500,000 and 2.9m jobs, finds initial evaluation

• Between 10-34% of BBLS borrowers and 7-28% of CBILS/CLBILS borrowers could have permanently ceased trading in 2020 without the schemes
• The Covid-19 loan guarantee schemes met their primary objectives of unlocking credit for businesses at scale and speed, and resulted in £78 billion in guaranteed loan facilities
• Reduction of approval times between CBILS and BBLS was necessary to prevent business failures

London: The first in a series of reports evaluating the government’s Covid-19 emergency loan schemes has found that hundreds of thousands of jobs could have been lost without the £78 billion of funding guaranteed under the schemes.

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 smaller businesses across the UK which were experiencing lost or deferred revenues, leading to disruptions to their cashflow.

One year later, the British Business Bank commissioned London Economics and Ipsos to undertake a multi-year evaluation of the three schemes. The first phase of the evaluation (PDF, 2.43 MB), published today, provides an early assessment of whether the objectives of the schemes were satisfied, and their impact.

Key findings

Early impact evaluation

This is an early assessment of the impact of the Covid-19 loan guarantee schemes, and will be refined as more data becomes available and the medium- to long-term impacts of the schemes become clearer.

• It is estimated that in the absence of the Covid-19 loan guarantee schemes, an additional 10%-34% of BBLS borrowers (146,000 to 505,000 businesses) and an additional 7%-28% of CBILS/CLBILS borrowers  ^{Read footnote text 3}  (5,000 to 21,000 businesses) could have permanently ceased trading in 2020.
• It is also estimated that 0.5 million to 2.9 million jobs could have been lost in the absence of the schemes
• The most common uses of the funds were working capital and to provide financial security
• Common actions undertaken by borrowers since raising external finance from one of the schemes included the adoption or expansion of digital technologies, innovation activities or building business resilience.

Process evaluation

• The Covid-19 loan guarantee schemes met their primary objectives of unlocking credit for businesses at scale and speed and resulted in £78 billion in guaranteed loan facilities, reaching just over a quarter of smaller businesses  ^{Read footnote text 4}  in the UK  ^{Read footnote text 5} .
• Loans were generally either used to fund operational expenses or to boost reserves and resilience to unexpected shocks, and guaranteed lending may have had a significant protective effect
• The introduction of BBLS helped ease pressure on lenders and accelerated timescales for loan approvals
• 270,000 Bounce Back Loans were issued in the first week, and close to 800,000 in the first month. Had lenders conducted their standard checks on such a volume of applications, it would have created an extensive backlog with smaller businesses waiting significantly longer for a loan during which period the survival of the business may have been at risk.

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  To provide a sufficient sample size for analysis, the sample of CBILS and CLBILS borrowers were grouped – the combined sample is referred to as “CBILS/CLBILS borrowers’’.

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  Small and medium enterprises (SMEs)

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  This is based upon the 1.5 million applications approved for the COVID-19 Loan Guarantee Schemes, and the 5.6 million active businesses in the UK