U.K. Approves More Than 69,000 Virus Loans on First Day of Plan

(Bloomberg) --

U.K. banks approved more than 69,000 state-backed loans on the first day of a program designed to help cash-strapped small businesses survive the coronavirus lockdown.

The loans are worth more than 2 billion pounds ($2.5 billion) in total, the Treasury said on Wednesday in a statement. Over 130,000 applications were received on Monday and lenders are attempting to process them as quickly as possible, it said.

The so-called bounce back loans, granted by commercial banks, will offer an interest rate of 2.5% and are 100% backed by the state for as much as 50,000 pounds. The government will also cover interest and fees for the first year. Earlier programs only offered banks 80% guarantees, making banks more reluctant to lend and leaving many small firms on the brink of insolvency.

The program is the latest in Chancellor of the Exchequer Rishi Sunak's suite of measures to help U.K business during the pandemic, including a pledge to pay the wages of furloughed workers. That's come at a high cost, with the government currently supporting more than 6.3 million people through the plan, leaving it looking for ways to ease workers off the program when the U.K. moves out of lockdown.

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