Member Article

388 UK SMEs write to Rishi Sunak urging him to scrap loan repayments

Hundreds of businesses have written to the Chancellor, urging him to scrap repayments on Government-backed loans ahead of next month’s Budget, or risk a tidal wave of insolvencies and business failures.

In an open letter to Rishi Sunak, 388 business leaders have called for “swift and decisive action” that would see debt accrued through Government-backed loans entirely written off for Small and Medium-Sized Enterprises (SMEs) to give the 2 million plus businesses who have taken out loans since the beginning of the pandemic, the best chance of survival.

Earlier this month, the Chancellor unveiled the “pay-as-you-grow” initiative for the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS). This offers businesses the option to extend repayment terms from six-years to ten, as well as make interest-only payments or pause them entirely for six months.

However, the co-signatories to the “Fighting Back for Business” letter to Rishi Sunak argue that these measures do nothing more than “delay the inevitable” with millions of SMEs teetering on the brink of insolvency. This is reinforced by recent warnings from the Federation of Small Businesses (FSB) that 250,000 businesses could be lost within the next 12 months alone.

. The hundreds of businesses who put their name to the letter span various sectors of the UK economy including corner shops, launderettes, hairdressers, theatre and dance companies, travel agents, yoga studios and countless others.

Many of the businesses have experienced extraordinary and considerable losses throughout the pandemic, with some being unable to trade since March 2020. Of the 388 businesses who co-signed the letter to the Chancellor, some have been forced to sell business critical equipment and others forced to take out personal loans in order to pay workers who had fallen through the cracks in Government support. The campaign group believes that writing off loan repayments would give the millions of businesses who took out Government loans earlier in the pandemic a lifeline to continue trading into the future.

It is estimated that the cost of writing off loan repayments would cost the Treasury approximately £68bn. However, the businesses argue that when compared to the costs of bailing out the banks after the financial crisis, which amounted to around £137bn, writing off repayments on Government-backed loans would be not just realistic but crucial to the recovery of the UK economy.

Simon Dolan, a serial entrepreneur and signatory to the “Fighting Back For Business” campaign letter said: “SMEs are the lifeblood of the UK economy and have been consistently overlooked during the covid-19 pandemic. Millions of businesses have admirably navigated the turbulent waters they have found themselves in during the last 12 months and deserve to be supported in their road to recovery.

James Thompson, Founder and Director of tour company Marmot Tours said: “We have been unable to run any holidays for 18 months, so have not had any income during this period. We are surviving on a loan, which is going to take years to repay.”

“There has been no tailored support from the UK government for the travel industry. We are currently uncertain when travel will resume and in desperate need of a grant so that we can recover.”

This was posted in Bdaily's Members' News section by Nathan Stennett .