Over half of the UK’s SMEs have used Bounce Back Loans to bounce back

Is the government-backed Bounce Back Loan scheme living up to its moniker?

New research from Starling Bank and Enterprise Nation shows that 55 per cent of Bounce Back Loan Scheme (BBLS) recipients have used the funds to grow their business.

The research shows that the government-backed cash has not only helped the UK’s SMEs to survive the pandemic but to grow and adapt as well.

Nearly a fifth of SMEs surveyed (18 per cent) reported ‘significant growth’ from the loan, while 37 per cent said it provided a degree of return.

Just over a third (36 per cent) of small and medium businesses have used the money to pay their bills, while 35 per cent have kept the funding in a rainy day fund. 

Over a quarter (27 per cent) have invested in their businesses, which includes introducing new products and services (27 per cent), bringing in new technology (13 per cent), retraining staff (13 per cent) and increasing marketing efforts (24 per cent).

“Bounce Back Loans have been a lifeline for SMEs,” says Helen Beirton, chief banking officer at Starling Bank.

“Not only have the funds allowed them to pay the bills and maintain crucial supply chains but it has enabled them to find the funds to flex their business model and better ride the wave of the pandemic," she added.

Nearly half of the 850 respondents (48 per cent) said that having the money in a rainy day fund has helped give them peace of mind throughout the pandemic, while over a third (36 per cent) said the reserve fund gave them more confidence to innovate, adapt or diversify their business.

“What this research shows is the resilience of small firms. Despite many having taken on a loan for the first time, they have put these funds to good use,” Emma Jones, CBE, founder Enterprise Nation, said. 

“The money has allowed them to confidently pivot, introduce new products and services such as online ordering systems or boost their e-commerce provision and enhance their online marketing. This must be a relief for the Government to hear.”

The latest figures from HM Treasury show that more than 1.53m BBLS have been approved since the scheme first opened back in May last year.

A total of £46.5bn has been lent to SMEs, roughly £30,000 per business, with Starling dishing out more than £1.58bn to over 53,000 limited companies and sole traders.

Today is also the first day that the government opened applications to the Recovery Loan Scheme. Among the respondents to the survey, 70 per cent of SME owners who took out a BBLS said they would consider applying for its successor.