Bounce back loans - how much has been borrowed where you live?

To see how businesses in your parliamentary constituency used bounce back loans and others, click here to use our exclusive interactive tool.


Bounce back loans – how much has been borrowed in your local area?

bounce back loan borrowing

When we published the first part of our series looking at the UK’s bounce back loan scheme earlier this month, it was to get a better view of the overall borrowing levels.

 

We found several official projections indicating that billions of pounds lent under the scheme would ultimately not be repaid, with the losses equal to the cost of building between six and 23 Wembley Stadiums from new. 

 

In the second part, we broke down the borrowing by industrial sector – comparing how much retail, hospitality, construction and all the other sectors had borrowed under the bounce back loan scheme.

 

For this final article in the series – we’re looking on a more local basis. 

 

Which nations and regions saw the most demand for bounce back loans? Which areas had the most borrowing per capita and which parliamentary constituencies had the highest bounce back loan borrowing rates?

 


Click here to use our exclusive interactive tool to see how businesses in your local parliamentary constituency have used recovery loans


Our methodology

The data sources used to compile the various best and worst-case scenarios used in the projections are taken from the Office of Budget Responsibility’s Fiscal Sustainability Report; the latest  BEIS annual report and the National Audit Office (NAO)’s regularly updated COVID-19 cost tracker

 

The UK regional and parliamentary constituency lending breakdowns were compiled and published by the British Business Bank

 

The number of businesses in each region was taken from the Department of Business, Energy and Industrial Strategy’s business population estimates. 

 

Using this public data as our benchmark, we projected three different scenarios for bounce back loan scheme defaults as outlined within them.

 

The scenarios set out a best case (with a 15% bounce back loan default rate); a median case (40% default rate) and a worst case scenario (60% default rate).

 

Finally, the regional classifications used are the official Classification Of Workplace Zones (COWZ) administered by the Office of National Statistics

 


Can a business consider liquidation if it has outstanding bounce back loans?


 

North East businesses most likely to borrow bounce back loans – but obtain the least money from them

regional bounce back loans

 

 

  • Average North East firm loaned £7,000 less than their London-based equivalent
  • London borrowed the most collectively and on average; North East and Northern Ireland the least
  • South West had lowest bounce back loan demand per number of businesses
Source: https://www.british-business-bank.co.uk/coronavirus-loan-schemes-continue-to-support-businesses-evenly-across-the-uk-new-analysis-shows/ 

 

When talking about millions and billions of pounds, It can be easy to lose sight of what these figures mean for individual businesses. 

 

Taking out a bounce back loan might have been the difference between closing down and remaining open at the time for many of the small and medium-sized businesses that are ultimately the bedrock of the UK economy. 

 

We’ve collated the total amount each devolved nation and English region has collectively borrowed under the bounce back loan scheme as well as the overall number of bounce back loans taken out by businesses based in that area. 

 

We also list the average amount borrowed by these companies individually, the ratio of businesses to loans in that area and the projections for default rates, based on our analysis:

 

While bounce back loans were supplied by banks and other lending institutions, because the funding was guaranteed, the amount lent was limited to between a minimum of £2,000 to a maximum of whichever was lower – £50,000 or 25% of the applicant’s 2019 turnover.

 

As might be expected then, the areas with both the highest number of bounce back loans taken out and the highest total amount of borrowing were London, closely followed by the South East of England. 

 

But if we look at the ratio of local borrowing – which is the total number of BBLS loans approved for that location divided by the total number of businesses operating in an area – then the picture changes.

 

For instance, 27.5% of businesses in the North East, over one in four, applied for finance under the bounce back loan scheme, which was the highest demand in the country. But the average amount actually loaned per applicant was £26,751 – the lowest figure in the UK.

 

That’s nearly £7,000 less than a comparable London-based business that borrowed an average BBLS amount of £33,480, the highest average amount in the country.     

 

27% of North West businesses applied for support funding, which were given £29,568 on average (nearly £3,000 more than their North East counterparts) while Welsh companies were the next most eager. 26.4% of businesses based in Wales took out bounce back loan borrowing to an average sum of £27,226 each.

 

Businesses in South West England had the lowest overall borrowing ratio with just over one in five (20.6%) applying to the scheme and taking £28,432 in bounce back loan lending support.

 

Businesses on the other side of the Irish Sea from the UK mainland in Northern Ireland saw the lowest overall number of bounce back loans taken out with just over 38,000 approved – nearly eight times less than the amount applied for by London based companies. 

 

Northern Ireland also saw the least amount of total borrowing too with £1.1 billion lent, although even this total could be subject to defaults in the range of £165 to £660 million depending on the ultimate level of defaults occurring.

 


Click here to use our exclusive interactive tool to see how businesses in your local parliamentary constituency have used recovery loans


 

Every MP has constituents who’ve taken out bounce back loans

bounce back loan not London

 

We’ve taken a deeper dive into the available data and analysed bounce back loan scheme lending according to the makeup of each of the UK’s 650 parliamentary constituencies. 

 

Regional and national data gives us a good understanding but we can see how the story looks even closer to the ground with this additional information.

 

The table below shows the top five constituencies for the total number of bounce back loans taken out by companies physically located in the area.

 

It also shows the total amount they borrowed, the average amount borrowed by businesses located there, the projected default rates and who the sitting MP is. 

 

This is who businesses might be contacting in future for help if their fortunes take a turn for the worse in the intervening weeks and months. 

 

Once again, London based companies dominate these results

 


 

Bounce back loan borrowing by parliamentary constituency

Source – https://www.british-business-bank.co.uk/wp-content/uploads/2021/01/CBILS-BBLS-Offered-Constituency-Region-Sector-11th-January-20215.pdf 

 

 

The City of London and Westminster constituency includes some of the most prominent and pricy real estate in the world including Pimlico, Hyde Park and most of Covent Garden. 

 

Businesses here dominate both the number of bounce back loans taken out (16,122) and the highest aggregate amount borrowed under BBLS at well over half a billion pounds (£633,881,829).

 

Some of the other areas in the top five might be more surprising. 

 

The neighbouring constituency to Westminster is Holborn and St Pancras, represented by Labour leader Sir Keir Starmer. This has the second-highest number of businesses taking out bounce back loans, borrowing a total of over £354 million, of which at least £53 million could be lost if just 15% of these borrowers default in the coming months. 

 

Hackney South and Shoreditch, most commonly associated with technology startups and the hipster coffee hangouts, were the next most eager to borrow with over 9,000 bounce back loans obtained, which provided over £300 million in support collectively for the app builders and small artisan brewers in this quarter of the city. 

 

The top five constituencies outside of London represent some of the other city centre areas of Birmingham, Manchester, Glasgow and Liverpool, along with a more surprising entry – Slough. 

 

Most famous as a commuter town at the southern edge of the Thames Valley and the fictional headquarters of Wernham Hogg paper as seen in the titles of The Office, Slough is also one of the largest mixed commercial estates in Europe combining a number of large manufacturers and corporate headquarters which will attract other companies wanting to be located closer.

 


Click here to use our exclusive interactive tool to see how businesses in your local parliamentary constituency have used recovery loans


 

Bounce back loan borrowing by parliamentary constituency (excluding London)

Source – https://www.british-business-bank.co.uk/wp-content/uploads/2021/01/CBILS-BBLS-Offered-Constituency-Region-Sector-11th-January-20215.pdf 

bounce back loan by constituency

 

Chris Horner, Insolvency Director with Business Rescue Expert, said: “The data gives a fascinating insight into the distribution of bounce back loan borrowing across the whole of the country.

 

“It’s especially interesting when you look at which areas have seen the most businesses borrowing and the amounts they have loaned.

 

“Based on the insolvency cases of the small businesses we’ve worked with this year, over 41% of them entered liquidation with an outstanding bounce back loan balance of £37,350 – higher than the individual borrowing averages of any location. 

 

“No matter where a business is based, the important thing for them to remember is that they do have options if they’ve taken out a bounce back loan and think they’ll have trouble repaying it.

 

By getting professional insolvency advice quickly, possibly before any potential problems appear, they will be in the best position to react and respond. 

 

“After nearly two years of consistent decline, company insolvency figures are starting to rise once more and as support measures are removed later in the year, we’d only expect this trend to gather pace. 

 

“It won’t happen at a uniform rate across the country, it will affect some areas more quickly and deeply than others.

 

“That’s why finding out more administration procedures and liquidation options now before circumstances force them to, could be the best call any business could make in 2021.”

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