Predicted 35-60% default rate of ‘bounce-back’ loans is colossal – and banks can hardly be blamed
Everybody knows the successful feature of the government’s bounce back loan scheme (BBLS). At the height of the pandemic, there was an urgent need to shovel loans to small businesses. The necessary compromise was to tell lenders not to be overly fussed about laborious credit checks. The operation had to be faster and looser than the separate coronavirus business interruption loan scheme.
The National Audit Office accepts that general thesis. BBLS “succeeded in quickly supporting small businesses,” says its report. Some 1.3m loans to businesses have been made since May worth £38bn. Jolly good.