Recommendation 20

HM Treasury referred specifically to the Bounce Back Loan Scheme, which accounts for £22.8 billion of the forecast total write-off costs of £26 billion.36 It told us that the first loan schemes had been too slow to grant loans to small businesses with no borrowing history and therefore no existing borrowing relationship with a bank or other lender. Even where there were existing relationships it had taken too much time for the lender to go through the approval process, introducing the major risk that a large number of businesses would not be able to survive long enough to get accredited for a loan. It was therefore an explicit policy decision to set up a scheme that would disburse loans quickly, and lenders were asked to set aside their normal processes for approving loans.37 However, HM Treasury stated that it expected loans to be repaid given the generous repayment terms offered, including repayment periods lasting up to ten years.38