Worry as loan scheme closes next month

Worries grow as scheme draws to a close.

The UK government’s Business Bounce Back Loan scheme (BBBL) was set up to support businesses hit by the pandemic, and it has paid out nearly £9m to small and medium-sized enterprises in the Western Isles since it was established in April.

Figures from the government-owned British Business Bank show that the BBBL made 389 loans locally totalling £8.7m up to the beginning of October.

Under the terms of the scheme, firms are able to borrow between £2k and £50k, capped at 25 per-cent of their turnover. The UK Treasury backs the loans, which are made by commercial lenders, and borrowers do not have to pay fees or interest for the first year.

But, with the BBBL scheme set to close at the end of November, concerns are growing locally about continued UK government support for businesses in the islands.

Chief Executive of Outer Hebrides Chamber of Commerce, Lynne MacIver said: “The Government’s Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme have been a lifeline for many businesses across the Outer Hebrides providing much-needed cash flow support in these challenging times.

“With the deadline extended to the 30th November, we expect to see the number of local business applications increase as business owners plan for the withdrawal of furlough support.”

Ms MacIver continued: “Over the longer term, the levels of borrowing and additional debt carried by businesses may slow our local recovery, however with businesses very much still in survival mode, the low interest, flexible loans have been a welcome and important component of the support available.

“Government and support agencies”, Ms Maciver concluded, “must work together to find ways to continue to support the unique needs of the businesses operating across the Outer Hebrides. Flexibility is key during the ongoing uncertainty as businesses continue to operate under challenging conditions.”

Western Isles MP, Angus Brendan MacNeil has called for the BBBL scheme to be extended. He said: “The UK Government, as the controller of the purse, is duty bound to do this, as many other Governments have across Europe.

“Hopefully, to date, the support has been adequate but more is required especially as we go into the winter and with a rising number of cases.

“The UK Government demands the economic powers, it now has to live up to its responsibilities.”

A HM Treasury Spokesperson said: “Our loan schemes have provided a lifeline to thousands of businesses across the UK – helping them survive the outbreak and protecting millions of jobs.

“At the Winter Economy Plan, the Chancellor extended the Bounce Back Loans scheme until the end of November. We keep all our support schemes under review.”

HM Treasury also confirmed that work is ongoing for a new, successor loan scheme to continue to provide support for businesses, which is not expected to be launched until January 2021.

On Tuesday, the Comhairle published details of the Scottish Government’s new Business Hardship Fund, which is being administered by local authorities.

The fund is providing £40m in funding for businesses and employees across Scotland who are being affected by the temporary coronavirus ‘brake’ restrictions that came into effect on October 9.

Payments under the Business Hardship Fund will vary between £1k or £1.5k depending on rateable value, up to a total of £10k for eligible business operating multiple premises.

The Comhairle confirmed in a statement that the fund will support some companies that can remain open but are directly impacted by the restrictions, including those that supply businesses that must close.

Comhairle nan Eilean Siar, which has also established its own fund to assist local businesses, confirmed this week that it issued 876 Business Support Grants, amounting to £9.18m to local business, through the Scottish Government’s Business Support Fund, which closed in September, and 46 grants worth £92k were also made by the authority through the Scottish Government’s Newly Self-Employed Hardship Fund, which offered support worth £2k to applicants.

Comhairle Nan Eilean Siar also administered the Scottish Government’s Bed and Breakfast Hardship fund, making 30 grants worth £90k locally.