One of the UK’s major policy thinktanks is urging the government to suspend repayments of COVID-19 debt for smaller firms until they have returned to profit.

Onward is suggesting that the emergency payments that businesses received from the state in the wake of the crisis should be claimed back by HMRC when the companies are in a healthier financial position. It goes on to argue that the best way for the Coronavirus Business Interruption Loans and Bounce Back Loans to be reclaimed would be by placing a surcharge on all taxable profits made by small firms and the salaries that are paid to their shareholders.

The Office for National Statistics recently revealed that one out of every five small firms in the UK is what it describes as a ‘zombie’ business – meaning any annual profits are cancelled out by debt servicing. Furthermore, 4.3% of small firms have been made technically insolvent by the pandemic, with debts that exceed their assets. With stats like these, it is little wonder TheCityUK is estimating that £35 billion of the £53 billion paid out may never be recovered.

Onward is calling its idea New Start, and argues that it is very similar to the student loan system, which only requires debts to be repaid when graduates are earning enough. It is one of several possibilities for small firms in trouble, and getting help from an accountant for small business in Goole or anywhere else in the country is another option business owners can consider.