Top business organisations are urging the government and lenders to allow small firms that are finding it difficult to cope financially the option of converting Bounce Back Loans to equity for employees.
This idea is being proposed by Ownership at Work and the Federation of Small Businesses (FSB) via the report ‘A Shares for Debt Recovery Plan’. The idea behind it is that those smaller companies that have received cash through the Bounce Back Loan Scheme can turn this into something called Employee Ownership Trusts, in the hope that this will help them to survive financially.
The plan would involve a set period of time in which the lenders would write off the loans, as long as the businesses in question set up Employee Ownership Trusts for their staff.
The FSB and Ownership at Work suggest that this would relieve financial pressure on small firms that would otherwise be unable to survive – thus helping economic recovery – and would also increase levels of productivity by giving employees a real stake in the companies they are working for.
Speaking to Small Business, the author of the report, Nigel Mason from Ownership at Work, said:
“Business owners keep the doors open, super-charge employee motivation and have a new patient shareholder. Employees keep their jobs, can share in future profits and have a stronger voice in the business.”
Some struggling smaller firms will be turning to the help of accountants in Goole or wherever they happen to live who are qualified to advise businesses.