The National Audit Office has revealed that construction firms borrowed £6 billion under the Bounce Back Loan Scheme (the Scheme) to keep them afloat as the effects of the coronavirus crisis swept across the UK economy.
A National Audit Office (NAO) investigation has reviewed the government’s Bounce Back Loan Scheme (the Scheme) that was introduced in response to the COVID-19 pandemic. The Scheme provides registered and unregistered businesses with loans of up to £50,000, or a maximum of 25% of annual turnover, to maintain their financial health during the pandemic. The Scheme launched on 4 May and will be open until 30 November, with government retaining the right to extend the Scheme.
The construction industry was the third largest borrower under the Scheme and represented more than 16% of all scheme loans. The rise in loans was close to double the value of business loans to construction businesses in 2019.
The real estate, professional services and support activities received the largest amount of support from the Scheme – £8.5 billion from 283,000 loans.
The Scheme had approved more than 1.2 million loans to businesses, totalling £36.9 billion. By 10 May, the end of the first week of operation, 268,000 loans totalling £8.4 billion were approved, increasing to £21.3 billion and 699,000 loans by the end of the first month.
By September around 90% of the loans under the Scheme went to very small (micro) businesses located across the UK. Micro businesses (turnover below £632,000) received £29.4 billion from 1,039,000 loans.
Sole traders received £6.4 billion from 297,000 loans, representing 18% of the total support by value.