UK banks are ramping up lending, marking the end of a loan drought after government Covid-19 support schemes were ditched.
The total value of lending to UK businesses climbed £12bn to £533bn in the nine months to May, according to research based on Bank of England data published today by debt advisor ACP Altenburg Advisory.
The rise comes after a £7bn dip in the value of outstanding lending in just two months after the end of government-backed loan schemes.
Under the bounce back loan scheme, launched to channel cheap into businesses struggling with the economic impact of the pandemic, the government would foot all the bill for banks if their loans soured.
The policy tried to incentivise lenders to flood the private sector with money by reducing default risk.
A later instalment, called the coronavirus business interruption loan scheme, covered 80 per cent of banks’ losses.
“Those government-backed schemes were vital for keeping the flow of lending going during the pandemic but once they ended, bank funding was harder to obtain for several months,” Will Senbanjo, partner at Altenburg, said.
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UK banks ramp up lending after Covid-19 support cliff edge