Small Businesses

Estimates indicate fewer Bounce Back Loan defaults than expected

Business Stats Graphs

The number of small businesses that default on the repayments of their Bounce Back Loans will be a lot lower than previously anticipated, according to the latest revised estimates.

These estimates have been made by bankers and government officials, and they are predicting repayment defaults totalling £5 billion, whereas before, they were expected to run into the tens of billions. The new estimated figure has been arrived at by assessing the servicing of these debts among small firms during the first months since repayment of the Bounce Back Loans began.

This shows that just five to 10 percent of the smaller businesses that received loans under the scheme have defaulted on any of the repayments up until now. One executive from a bank lender for the scheme stated that five percent of the companies that had made use of it had already fully repaid the loans.

Some of the businesses needing to work out a steady repayment plan will likely have sought help from accountants in Goole or wherever they are headquartered to do this.

The results of the initial government assessment in 2020 suggested that anything from 35 percent to 60 percent of smaller businesses could default on the loans, with up to £19 billion being lost as a result.

However, some of the banks that loaned money still think that problems of this sort may have been pushed into the future thanks to ideas like ‘pay as you grow’. This gives firms the option of delaying repayments by six months or paying back over a 10-year period.

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