Small Businesses

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A new survey of small firms in the UK suggests that close to half of them will find it extremely difficult to repay COVID-19 Bounce Back Loans while remaining financially viable.

In total, 39% of the small firms that participated in this survey – which is around four out of every 10 – stated that having to repay these loans from later this month will be a serious financial burden for them. Furthermore, over one quarter of the companies that took part indicated they are not optimistic about their prospects for the next 12 months.

Around 34% of firms stated that the past year had brought a drop in their revenues, although this was balanced by the 37% who stated that they had enjoyed revenue growth during that period.

Speaking to City AM, Lucy Cohen of Mazuma said that although repaying these loans was due to begin this month, the actual recovery from the pandemic has not yet begun for many smaller firms.

Some of these companies may choose to go for the option called ‘Pay as You Grow’ to avoid immediate hefty repayments, but Cohen went on to say that:

“While the concept is sound, the implications for businesses who opt to either delay the start of their repayments by six months or extend the term of the loan from six to 10 years, or both, could do more harm than good.”

Talking to accountants in Goole or wherever they live could help firms find workable repayment plans.

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