Government pays nearly £136m in interest on Covid-19 loans
The amount of interest paid to some of Britain’s biggest banks on two Government-backed Covid-19 loan schemes is more than double what was first reported.
New figures show that the Government paid £135.8 million to lenders for providing billions of pounds to support UK businesses between April and June as part of the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme.
Less than two weeks ago, the British Business Bank told the PA news agency that only around £66 million in interest had been paid under the two schemes.
However, the Government-owned bank has now said that the data, which was released under a Freedom of Information request, was incorrect and only included CBILS interest.
The full amount paid during the three months – including both schemes – is £135,756,007, the British Business Bank said.
It also revealed that the Government paid around £39.2 million in arrangement fees for the banks to provide CBILS. These fees have not been charged on bounce back loans.
The Government promised to cover the interest on both schemes for the first year after the loans were taken, to help take pressure off the companies.
The interest is paid in quarterly installments, so the figure only covers the first three months of the schemes being in place.
More than £57 billion has been lent under the two schemes to date. Last week, businesses were given the option to top up their bounce back loans if they had taken less than the maximum of £50,000 – up to 25% of annual turnover.
The loans were handed out at record speed. The bounce back loans have a flat 2.5% interest rates, while CBILS can charge anything up to 14.9%. The average for all CBILS loans is 5.1%.