One in 10 companies using Covid debt fears end
ONE in 10 businesses that have taken on debts from government-backed coronavirus schemes could go bust, according to a prominent survey.
The schemes have been used by 42pc of companies during the pandemic, and more than a quarter report that they may have to scale back operations to repay them, a poll by the British Chambers of Commerce with banking group TSB found. Moreover, 11pc of those companies said they might have to cease trading altogether.
The lobby group warned that businesses that had not yet drawn on finance could still need help, particularly if they are restricted by local lockdowns and as government support schemes are withdrawn. The survey of 502 firms, mainly small and mediumsized enterprises in the manufacturing and services sectors, revealed that most companies drawing on govern- ment schemes did so to support critical day-to-day business operations, while 71pc had cash flow issues, 43pc needed help with overheads and 40pc could not otherwise have paid staff.
“Government loan schemes have been a lifeline,” Adam Marshall, director of the BCC, said. “Bold solutions will be needed to prevent thousands of firms from falling into a spiral of unsustainable debt.”