British lenders face a growing stream of new demand for loans as Covid-hit businesses seek funds to cope with a second lockdown.

Banks say applications are now as high as they were in June, while a third of borrowers who have already received money from the hugely popular Bounce Back loans programme could be eligible for a top-up.

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The government has extended the application deadline for loan schemes – that is, the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, Future Fund, and Coronavirus Large Business Interruption Loan Scheme – to the end of January 2021.

Prior to the extension, lenders had already dispensed more than £60bn under the Government’s coronavirus loan schemes.

For now, however, the UK’s biggest high street banks are not taking on any new business customers as they fight a backlog of existing applications for Bounce Back loans.

Businesses get extra time to secure loans

The extended deadline gives businesses two extra months to make loan applications (relative to the previous deadline of 30 November).

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The government has also adjusted the Bounce Back Loan Scheme rules to allow those businesses who have borrowed less than their maximum (i.e. the lower of £50,000 or less than 25% of their turnover) to top-up their existing loan.

Businesses will be able to make use of this option once.

“We understand that some businesses didn’t anticipate the disruption to their business from the pandemic would go on for this long; this will ensure that they are able to benefit from the loan scheme as intended,” the government said in a statement.

Local businesses in England get further support

Businesses in England that are forced to close due to national or local restrictions will receive up to £3,000 per month.

This is worth over £1bn a month with the new restrictions in place, and will benefit over 600,000 business premises.