Plea for small firms finding debt unmanageable by Lancashire-based business group
The British Business Bank latest Small Business Finance Markets report, shows gross bank lending to smaller businesses rose 82 per cent to £104bn in 2020.
In response, Federation of Small Businesses national chairman Mike Cherry suggested loans should only start to be paid back when firms become profitable again.
He said: “The BBB has been a critical component of the business support landscape over the past year, helping more than a million small firms to access the emergency finance they’ve needed to stay afloat.
"The BBB’s role will no doubt become even more fundamental as we withdraw from EU funding streams.
"Of the small firms that have recently accessed finance, four in ten now describe their debt as ‘unmanageable’. Many of those in the very hardest hit sectors, events, travel and those at the heart of our night time economies, accessed loans last summer in the hope that we’d be out of the woods by Christmas.
A lot of them do not fit the narrow definitions of frontline retail, leisure and hospitality so have received little by way of direct government support.
"More than half of those with facilities say a student loan approach, whereby repayments are only made once a firm is profitable again, would be a helpful way forward. As repayments start to fall due, lenders should remember that these loans were only made possible by the Government in order to help firms in need, and treat borrowers accordingly.
“We very much hope the Recovery Loan Scheme proves successful over the years ahead and look forward to regular updates on take-up.”