Struggling british companies have been forced to borrow close to 58bn in emergency loans backed by the government during the coronavirus pandemic, according to figures released by the treasury.
The data published on tuesday which show a rise of almost 5bn in the past month comes ahead of an expected extension for the four schemes put in place to support bank lending to companies to help them survive the effects of the economic lockdown.
The treasury also said on tuesday that companies had taken almost 40bn under the job retention scheme to cover the wages of furloughed workers. alongside a further 13.4bn to help self-employed workers, the total for the various business support schemes has risen to well above 100bn in loans and payouts from banks and the treasury, according to the data.
More than 1.3m businesses have taken on extra debt through government-backed coronavirus lending, with the vast majority using the bounce back loan scheme that offers loans of up to 50,000 with only minimal checks on the borrower to speed up the banks application process.
The financial times reported on monday that the treasury was planning to extend the state-backed loans schemes. three of the four schemes had been due to close this month to new applications.
But all four loan schemes are expected to be extended until the end of november as treasury officials race to protect businesses from the next stage of the lockdown. an announcement is expected as early as this week, according to people familiar with the situation.
The extension is set to include the future fund, the scheme that offers loans that could convert into equity stakes for the government in scores of fast-growing start-ups.
Announcing a new tightening of restrictions to try and slow the spread of covid-19, prime minister boris johnson told mps on tuesday that the government had extended loans and grants to every conceivable section of the economy...and we will of course do more.
He said that the government had committed 160bn to support business and jobs, and would continue to put our arms around the people of this country.
The data show that businesses still require additional support from the government as they prepare for the possibility of even tighter measures over the next six months.
Warning that further steps may need to be taken to stop the rise in infections, mr johnson announced that from thursday pubs and restaurants would be subject to a 10pm curfew and reversed earlier guidance that had encouraged workers to return to their offices.
More than 38bn has now been lent by banks under the bounce back loan scheme. the success of the scheme designed to help the smallest companies has raised concerns about the scale of potential defaults given fears that many of the businesses will be unable to cover loans when they are forced to start paying interest after a year.
The coronavirus business interruption loan scheme has backed almost 66,600 companies with loans worth 15.5bn, while 566 larger businesses have been supported by the coronavirus large business interruption loan scheme at a total of 3.8bn.
Stephen pegge, managing director of commercial finance at uk finance, which represents the banking sector, said these schemes are just one part of a wide package of measures from the industry, including commercial lending, capital repayment holidays, extended overdrafts and invoice finance facilities.