Loan interest

Companies ask for even more time to pay off emergency Covid loans

Businesses are asking for more time without payment on their emergency Covid loans on top of the extra time the government has already announced, new data shows. Of 500 companies looking for repayment plans, 83% had requested all the payment vacation they could get or even a full year of non-payment on their Bounce Back loans.

The data comes from resource company Momenta Group, which helps banks collect repayments from businesses that borrowed during the pandemic. The main request Momenta receives from companies is to add another 12 month interest-free payment deferral.

Businesses that took out a Bounce Back loan were originally given a year without repayment, during which the government recouped the 2.5% interest on their loans.

However, after the first 12 months, the companies had to start repaying. The government said it would give companies another six-month interest and repayment holiday, and three six-month interest holidays.

However, companies will still have to pay interest, which will accrue during this period. For many, that’s not enough help, statistics from Momenta show.

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Momenta Managing Director Richard Stevens said: “While the government and banks have made a number of unusually generous repayment options available, there is a specific cohort of SMEs (small and medium enterprises) that are in the quagmire.

“Among those companies that are struggling to repay, the majority have asked for a one-year extension of popular interest-free payment holidays beyond what has already been proposed.

“What is concerning is that companies struggling to repay have requested this full refund moratorium on programs like Pay As You Grow, which is already in place to facilitate the refund process. “

He added: “There is immense financial pressure on business owners from all angles – not least due to the slow recovery in sales and the end of the leave scheme, but the labor shortage. The additional cost due to the start of Brexit has worsened with rising costs of some raw materials and supply disruptions.

“From our perspective, it was these combined reasons that compelled additional skilled collection professionals to empathize and negotiate repayment plans, as well as members of the compliance analyst team. and credit to review the loan process. “

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