More than half of SMEs use Bounce Back Loans to grow

8th April 2021

  • 55% of Bounce Back Loan Scheme recipients used funds to grow their business
  • Cash reserves also helped strengthen mental wellbeing (48%) and boost confidence (36%)
  • One in four SMEs would consider applying for a Recovery Loan

08 April 2021, London: 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%).1

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%).3

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, said: “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.”


Notes to Editors

Methodology

Enterprise Nation surveyed its membership of limited company owners and sole trader business leaders, between 10-19 March 2021, securing 850 online responses.

What are Bounce Bank Loans (BBLS)?

The Bounce Back Loan Scheme (BBLS) provides financial support to businesses across the UK that are i) losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak and ii) can benefit from £50,000 or less in finance. The scheme is a part of a wider package of government support for UK businesses and employees, and the loans are delivered through approved banking partners.

Footnotes

1. Of businesses surveyed by Enterprise Nation, 35% had taken out a Bounce Back Loan. When asked what the loan was used for, the most common reason was to help with cash flow (54%), followed by rent and bills (36%), and providing a safety net (35%). Other options include introducing new products and services (27%), increasing marketing efforts (24%), diversifying into new markets (13%), upskilling and retraining (13%), investing in home working tech (13%), new IT (12%), sales tech (9%) and hiring (3%).

2. Correct as of 21 March 2021. https://www.gov.uk/government/collections/hm-treasury-coronavirus-covid-19-business-loan-scheme-statistics#Bounce-Back-Loan-Scheme

3. Of those respondents who reported taking a BBLS loan, 48% said it gave them peace of mind at an extremely difficult time, 36% said it gave them confidence to innovate and 27% said it gave them confidence to adapt their business.

About Starling Bank

Starling Bank is an award-winning, fully-licensed and regulated bank built to give people a fairer, smarter and more human alternative to the banks of the past. It offers business, personal, joint, child, euro and dollar current accounts alongside a range of lending products. Starling also provides B2B banking and payments services through its Banking-as-a-Service model based on the proprietary technology platform that it uses to power its own bank. The Starling Marketplace offers customers in-app access to a selection of third party financial services. Headquartered in London, it has offices in Southampton, Cardiff and Dublin. Starling has opened 2 million customer accounts, including more than 330,000 limited company, sole trader and accounts.

Contact:

Starling Bank Press Team

media@starlingbank.com


Camilla Ives / Tabby Haysom

camilla@thirdcity.co.uk / tabby@thirdcity.co.uk

07935 006 840 / 07719 939 902

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