Understanding the Dynamics of UK Covid‐19 SME Financing

The scale of the UK government's response to Covid-19 crisis after first lockdown in March 2020 was unprecedented. For business sector, two financing schemes were particularly relevant: Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back (BBLS). Both designed support capitalization businesses through this difficult trading period. In paper, we use data covering quarters explore dynamics small medium-sized enterprise (SME) particular role government schemes. Our findings show that 92.1% all debt funds provided period backed by government, which compares less than 5% under normal circumstances. We find demand, supply share SME lending increased from quarter 1 (April–June 2020) 2 (July–September 2020), micro had highest demand for loans, better-performing firms more likely receive loans. Further, a world where loan requests ever granted, pool loans different risk profile non-government-backed