The Covid-19 pandemic has severely affected firms through the direct impact of the lockdown, falling demand, reduced input supply, the tightening of credit and liquidity conditions, and rising uncertainty.
One way to help businesses through a crisis of this nature is to give them access to finance to tide them over until the economy improves. To this end, the UK government quickly introduced loan guarantee schemes. The Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS) provide financial support to businesses across the UK that are losing revenue and seeing their cashflow disrupted.
Debate continues about how these schemes might be developed as the crisis continues and whether other interventions should be considered.
To inform this debate, this rapid evidence review provides a summary of the evaluation evidence on the impact of government access to finance schemes and some general guidelines on designing effective policy responses drawing on the broader economics literature. Our aim is not to offer a comprehensive discussion of the current crisis, but to provide a concise summary of relevant evidence that tells us what has worked in the past and any lessons this holds for current policy.