Small businesses fear bankruptcy unless repayments on Covid commercial loans are canceled | London Business News

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A third of SMEs say they will go bankrupt unless COVID business loan repayments are canceled, according to a new survey of small and medium-sized businesses in the UK.

Led by the Fighting Back for Business campaign, the data shows that the majority of businesses that took out emergency business loans during the pandemic will struggle to repay. A quarter of small businesses surveyed have seen as much as £ 100,000 off their balance sheets since March 2020. Two-thirds of business owners expect their business to collapse or be irreparably damaged by the burden additional repayment of the COVID loans they have taken out. survive confinements.

Business owners revealed they had no choice but to take out an emergency business loan, either because they had been forced to close during the pandemic or because the foreclosure policies of government emergency reduced their profitability and created economic uncertainty.

When asked if Chancellor Rishi Sunak’s new ‘pay as you grow’ initiative would help ease the burden, 95% of those polled said it would only increase the amount of interest they pay. ‘they would pay off, leaving businesses on hold longer and hampering future growth.

The new findings come just a week after 388 companies in the Fighting Back For Business campaign wrote to the Chancellor in an open letter, calling for the debt accumulated from government guaranteed loans to be written off entirely in the small budget. and medium-sized enterprises. Businesses (SMEs).

To date, the government has provided £ 68.2 billion in loans to over 1.5 million SMEs. Canceling them would have cost less than half of what it cost to bail out banks after the 2008 crisis.

James Thompson, Founder and Director of Marmot Tours Travel Agency, said: “We haven’t been able to organize a vacation for 18 months, so we haven’t had any income during that time. We are surviving on a loan, which will take years to pay off. There has been no tailor-made UK government support for the travel industry. We do not currently know when travel will resume and we desperately need these loans to be canceled if we are to survive. “

Entrepreneur Simon Dolan said: “SMEs are the backbone of the economy and it is tragic to see how many of them are irreparably damaged during the foreclosure. Time and time again, these companies have dusted themselves off and started over, constantly adapting their business models to keep operating under the most difficult circumstances. SMEs are growth engines that stimulate innovation and provide new sources of employment, so it is imperative that they are protected.

No business leader will have wanted to contract these loans. Instead, their hands have been coerced by the government by implementing measures that are totally disproportionate to the threat. It was only by using these loans that SMEs had any hope of survival, spending thousands of pounds trying to be “Covid-secured” and get things done.

Rather than tackle the problem in the budget this week, the Chancellor instead announced yet another payback loan program to replace the completely destructive business interruption loan programs when it ends. This announcement is nothing more than lip service and will do little to alleviate the immense economic pressures that SMEs are under. The first step towards a thriving post-coronavirus economy rests on businesses that are still open and not weighed down by impending loan repayments. The Chancellor’s failure to acknowledge this is likely to lead to yet another tidal wave of corporate insolvencies and bankruptcies this year.

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