[Editor’s note: This is a guest post from Ryan Weeks, formerly with Dow Jones and AltFi, covering fintech. This is part one of a four part series he is writing for us on the UK fintech market in the run-up to LendIt Fintech Europe.]
Soon after the UK went into lockdown in March, chancellor Rishi Sunak unveiled his £350bn emergency rescue package for British businesses.
This unprecedented intervention laid the foundation for a handful of government guaranteed lending schemes that have completely changed the fintech lending landscape over the past six months.
The three marquee schemes are the Coronavirus Business Interruption Loan Scheme (CBILS), which offers an 80% guarantee for loans of up to £5m; the Coronavirus Large Business Interruption Loan Scheme (CLBILS), for bigger businesses wanting to borrow up to £200m, again with an 80% guarantee; and the Bounce Back Loan Scheme (BBLS), which offers a 100% guarantee for loans of up to £50,000 for micro-businesses.
The usage of these initiatives alone shows how valuable they have been to UK businesses. As of 16 August, £13.68bn had been distributed under CBILS, and another £3.5bn through CLBILS.
BBLS, despite launching later, became an overnight sensation; more than £8bn had been approved by the time the government issued its first update on the scheme on 10 May. The latest figures show that a grand total of £35.47bn has been lent out through BBLS.
The advent of lockdown in the UK was, to quote one executive at a corporate advisory firm who wished to remain anonymous, “close to disastrous” for fintech lenders. He said that fee income for the big platform lenders in the months of April, May and June was “close to zero”.