More than half of SMEs use bounce loans to grow

More than half of UK businesses (55%) that took out a loan under the government-backed Bounce Back Loan Scheme (BBLS) used the money to adapt and grow, according to a new report from Enterprise Nation and Starling Bank.

Research suggests that BBLS loans have played a role beyond survival in the face of the pandemic.

While a third (36%) of small and medium enterprises (SMEs) used their BBLS loan to pay bills, 35% kept funds in reserve and one in four (27%) used the cash to invest in their business. This investment includes the introduction of new products and services (27%), the introduction of new technologies (13%), the upgrading of staff and retraining of staff (13%) or the intensification of marketing efforts. (24%).

Enterprise Nation, which provides support and advice to small businesses, surveyed 850 of its members. Respondents were asked a series of questions about their borrowing, including BBLS, over the past year.

Among respondents, almost half (48%) said 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. business (36%).

Of the small businesses surveyed, 18% reported “significant growth” in the loan and 37% said the loan provided some return.

The study also indicates that interest in the government’s new stimulus loan program is high, with seven in 10 small business owners who took out a bounce loan (70%) saying they would consider applying. or the equivalent of one in four SMEs (25%).

Helen Beirton, Director of Banking Services at Starling Bank, said: “Bounce loans have been a lifeline for SMEs. Not only has the funds enabled them to pay the bills and maintain critical supply chains, it has also enabled them to find the funds needed to adapt their business model and better ride the wave of the pandemic. “

Figures from HM Treasury show more than 1.53 million rebound loans have been approved since the program started last May, with £ 46.5 billion loaned to small businesses – around £ 30,000 per company.

Emma Jones, CBE, founder of Enterprise Nation, said: “What this research shows is the resilience of small businesses. Although many took out a loan for the first time, they put the funds to good use.

“The money allowed them to confidently pivot, introduce new products and services such as online ordering systems or strengthen their e-commerce offering and improve their online marketing. It must be a relief for the government to hear. “

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