More than half of British businesses (55%) that have taken out a loan under the government-backed Bounce Back Loan Scheme (BBLS) have used the money to adapt and grow, according to a new report from Enterprise Nation and Starling Bank.
The research suggests that BBLS lending has played a role beyond mere survival in the face of the pandemic. While a third (36%) of small and medium-sized enterprises (SMEs) have used their BBLS loan to pay the bills, 35% have kept funds in reserve and one in four (27%) have used the cash to invest in their business. This investment includes introducing new products and services (27%), bringing in new technology (13%), upskilling staff and retraining staff (13%) or increasing marketing efforts (24%).
Enterprise Nation, which provides support and advice to small businesses, surveyed 850 of its members. Respondents were asked a range of questions about their borrowing, including BBLS, in the last year.
Among the respondents, nearly half (48%) said that having the funds in reserve gave them peace of mind during a difficult time and/or gave them greater confidence to innovate, adapt or diversify their business (36%).
Of the small businesses surveyed 18% reported ‘significant growth’ from the loan and 37% said the loan provided a degree of return.
The study also indicates that interest in the government’s new Recovery Loan Scheme is high, with seven in 10 SME owners who took out a Bounce Back Loan (70%) saying they would consider applying – equivalent to one in four SMEs (25%).
Helen Beirton, Chief Banking Officer at Starling Bank said, “Bounce Back Loans have been a lifeline for SMEs. 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.”
Figures from HM Treasury show that more than 1.53m Bounce Back Loans have been approved since the scheme was launched last May, with £46.5bn lent to small enterprise – approximately £30,000 per business.2 Starling has lent over £1.58bn in BBLS to over 53,000 limited companies and sole traders.
Emma Jones, CBE, founder Enterprise Nation added, “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. 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.”