COVID-19: Business loans to reach five times more than last year
Due to the ongoing coronavirus crisis, there are estimates that the amount of net borrowing from UK organisations will surpass five times the number in 2019, as businesses struggle to survive the second wave.
Many businesses, who are experiencing disruption of cash flows and revenues, will not begin to pay their loans off for more than a year, provided the pre-coronavirus economic circumstances return.
According to a report, that highlights the essentialness of bank lending during the pandemic, banks loaned £43.2 billion up until August to non-financial companies. This number is almost five times more than last year, which reached loans of £8.8 billion.
These findings were from a report produced last week before the Government announced the second national lockdown in England, starting Thursday this week. Therefore, lending to businesses is more than likely set to increase in the coming weeks.
Britain’s largest banks reported less third-quarter bad loan provisions than anticipated last month. Unfortunately, this suggests that the financial by-product from the coronavirus is yet to set off a wave of shortcomings for businesses.
The report predicts that the total business loan losses will rise from 0.3 per cent in 2019 to 0.4 per cent this year, rising to 0.5 per cent in 2021.
Additionally, it predicts that write-off rates on consumer credit will rise from 1.3 per cent to 2.5 per cent in 2021.