//UK says demand for COVID loans hits nearly 35 billion pounds
UK says demand for COVID loans hits nearly 35 billion pounds2020-08-06T04:31:51+00:00

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    By William Schomberg

    LONDON, June 9 (Reuters) – British businesses have borrowed nearly 35 billion pounds ($44 billion) under three emergency credit programmes for companies hit by the coronavirus crisis with demand strongest for a 100% state-backed scheme for the smallest firms.

    After a recent warning by lenders that some of the borrowing might prove unsustainable for companies hit by the COVID lockdown, the Treasury said total lending under the Bounce Back Loan Scheme (BBLS) rose to 23.8 billion pounds by June 7 from 21.3 billion pounds by May 31.

    <u><b>That represented a slightly smaller increase than in the previous week.</b></u>

    The BBLS, which gives loans of up to 50,000 pounds, was launched in May after signs that other lending schemes were making slow progress.

    The Coronavirus Business Interruption Loan Scheme, which carries an 80% government guarantee for loans of up to 5 million ponds and was launched in March, reached 9.6 billion pounds, up from 8.9 billion pounds a week earlier.

    The separate Coronavirus Large Business Interruption Loan Scheme saw approved lending rise to 1.6 billion pounds, up nearly 500 million pounds from a week earlier.

    The finance ministry said its job retention scheme – which pays 80% of the salaries of employees who are temporarily laid off – now covered 8.9 million workers, up from 8.7 million a week earlier, costing 19.6 billion pounds so far.

    <b>A separate scheme for self-employed people had received 2.6 million claims for 7.5 billion pounds.</b>

    Last week, Britain’s budget watchdog estimated that the two income support programmes were likely to cost nearly 70 billion pounds, more than the country’s entire public sector borrowing last year.

    It also estimated the government would take a 5 billion-pound hit in the current financial year from losses on its coronavirus loan programmes with further defaults likely in the future.

    A group representing Britain’s finance industry warned on Sunday that about a third of the debt being taken on by British companies under the coronavirus lending programmes could be unsustainable.

    As well as the three schemes backed by the government, the Bank of England is holding just over 16 billion pounds’ worth of debt issued by large companies with investment-grade credit ratings under its COVID-19 financing facility. ($1 = 0.7910 pounds) (Editing by David Milliken)

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