One in 10 com­pa­nies us­ing Covid debt fears end

The Daily Telegraph - Business - - Business - By Lizzy Bur­den

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.”

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