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Half of UK firms given loans by British Business Bank would have gone under in pandemic

Soaring Covid cases could cause major shortages across industry, hospitality and healthcare, ministers have been told, as rail companies cancelled services and Royal Mail said it was experiencing high staff absences.

Nearly half of the companies supported by a state-owned fund would have gone bust in the pandemic without its support, a new report has found.

The British Business Bank’s £1.14bn support to 1,190 firms helped 48 per cent stave off going bust during uncertainty of coronavirus.

The evaluation from the BBB said more than 60 per cent didn’t think they’d have been able to raise funding independently, while 85 per cent of recipients took on R&D initiatives since.

The project, which had a short term goal of increasing availability of equity finance to firms impacted by covid, was found to have met that goal by the evaluation, conducted by RSM UK consulting.

“COVID-19 presented monumental challenges for British businesses which is why it was so important that the government stepped in during their time of need”, said business secretary Grant Shapps.

“Whether it was supporting firms to stay open or equipping them to access capital and grow, today’s findings highlight the vital role of the Future Fund in keeping our most innovative businesses ticking along during a challenging time.”

The fund gave out loans through schemes to 1,190 firms, which had a total of more than 28,000 employees. These funds had to have at least equal match-funding from investors, and the scheme was deployed in May 2020 until January 2021.

Firms had a reduced risk of closure and long term damage as a result of the dunging according to the report, despite the pandemic forcing the number of equity deals plummeting by 32 per cent by early 2020.

Ken Cooper, managing director, venture solutions, at the British Business Bank said: “The Future Fund was created at a time of great uncertainty in the venture capital markets and when the country was learning new ways of working through a pandemic.”

“Against that backdrop, seeing the positive outcomes reflected in this independent evaluation is fantastic. We supported over a thousand companies many of which have since gone on to gain subsequent investment where they might not otherwise have survived.”

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Half of UK firms given loans by British Business Bank would have gone under in pandemic