The government’s Bounce Back Loan Scheme (BBLS) launched today, allowing small businesses in the UK to apply for loans of up to £50,000 - but doubt has been cast on banks' ability to cope with demand.

The initiative consists of six-year loans of between £2,000 and £50,000 which are fee, interest and repayment-free for a year. After that, interest rates will be 2.5 per cent, regardless of which lender provides the credit. The government is offering a 100 per cent guarantee on the loans to allow banks to advance the cash quickly.

Max Chuard, chief executive of banking software firm Temenos, noted that unlike the earlier Coronavirus Business Interruption Loan Scheme (CBILS), the new programme promises to fast-track finance for businesses in need and give access to cash ‘within days’.

"However, its effectiveness will depend heavily on whether UK banks are equipped with the right technology to be able to cope with this unprecedented and increasing demand for fast finance," he commented.

“As banks look to quickly move away from restrictive legacy IT, cloud models offer rapid delivery times, and the ability to quickly scale up or down to meet change in demand," Chuard continued.

“With banks’ workforces more stretched than ever due to illness, self-isolation and staff caring for their families, the cloud can expedite and dramatically improve loan processing, helping skeleton workforces to optimise their efforts, automate manual processes and support the faster delivery of huge volumes of loans."

At the end of April, UK Finance confirmed that CBILS lending had topped £4.1 billion, with over £1.33 billion of loans were approved in the week to 28 April.

The number of loans provided through the scheme has doubled by 8,638 over the same period, to a total of 25,262. Lenders have received 52,807 completed applications, with 25,262 of these approved to date.

However, the scheme has attracted criticism from MPs, trade associations and small businesses over the slow pace of lending and the difficulty some have had accessing it.

Stephen Jones, chief executive of UK Finance, responded to today's launch: “Accredited lenders approved to offer Bounce Back Loans have worked at pace with the Treasury to get this scheme up and running by Monday, and staff are now focused on processing applications and getting money to businesses as quickly as possible.”

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