Loan schemes hold off insolvencies


Pay ratio regulation needs revisiting

The Independent’s Ben Chu says that while large numbers of firms have been hit financially by the coronavirus crisis, the number of business insolvencies has fallen this year, with this in large part thanks to state-backed bank loans. Colin Haig of restructuring trade body R3 says the reason the impact of the pandemic “hasn't shown up in the insolvency statistics yet is because of the extensive support the government has provided”. He adds: "Without it, we'd be in a very different situation - and a very grave one at that." Mr Chu highlights that across a number of Government loan schemes, 1.5m firms have tapped £65bn of credit, while Bank of England figures show that net bank lending to SMEs in the year to October was more than 40 times higher than the average of previous years. With the Bank saying further support will be needed, the Treasury is working on a successor to the loan schemes. Mr Chu warns that if officials make the new scheme considerably more rigorous, many firms could find themselves facing insolvency.


Read more: The Independent


 

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