Several months after the UK government announced a package of support for small businesses to help them through the disruption of the pandemic and subsequent lockdown, the banks administering the government’s Coronavirus Small Business Interruption Loan Scheme issued a warning. UK banks told the government that between 40 and 50 percent of the businesses in receipt of the loans would be likely to default when support was withdrawn, threatening to make a mockery of the ingeniously named “bounce back” loan system.

Given the loans are issued by the government and simply administered by the banks, the latter were less concerned with the impact the defaults might have on their balance sheets than they were the administrative and PR implications of commencing insolvency proceedings against hundreds of thousands of UK small businesses. The government, meanwhile, seems blithely unconcerned about the economic and political impact of doing the same.

More than a year after the banks issued their first warning, many of the businesses that took government support — and which have survived the pandemic thus far — will begin making repayments on their loans. The furlough scheme is also coming to an end, meaning these businesses will be hit by a significant increase in costs as the Delta variant spreads throughout the country.