New figures from the Treasury show that, as of July 5, more than one million SMEs in the UK have been successful at securing a Government's Bounce Back Loan through the scheme set up by Rishi Sunak to help business survive the lockdown and beyond. The total amount lent by the Government is now at £31billion and has allowed small business across the UK borrow up to a quarter of their annual income - which is capped at £50,000. It has proved hugely popular as soon as it was being introduced and has combated the rising issues and concerns from the low approval rates of the Coronavirus Business Interruption Loan Scheme (CBILS).
With an economic contribution of over £2 trillion, the success of the UK economy as a whole may in future hinge on the prosperity of SMEs, start-ups and high-growth firms. Furthermore, SMEs make up 99% of private sector businesses and thus allowing them the best possible chance to grow and create jobs through adequate financial support is key.
Luke Davis, CEO of IW Capital and small business expert, discusses the need to continue to support SMEs :
“This period has been incredibly difficult for SMEs and the bounce back loan scheme has helped a huge amount of businesses to survive what has been a tremendously difficult period. One of the key points in economic recovery in the next year or so is to fully support the SMEs of the UK to come roaring back with confidence with the right kinds of investment and mentorship.
As private finance providers, we have a responsibility to back ambitious and innovative firms and founders. Luckily this is something the SME sector in the UK has in spades. We have already seen from the CBILS that banks are unwilling to lend without huge guarantees which further increases the importance of private support and alternative finance.
State-sponsored initiatives and infrastructure investment will be key to giving businesses confidence but the majority of funding is likely to come from private sources. Therefore private equity through schemes such as the EIS will be crucial to unlocking the growth potential of these firms. If the Government is willing to underwrite £31 billion of loans, extending the EIS could be a great way to increase investment into this vital sector.”