Yahoo Finance Businesses ask for more time to repay Covid loans, data shows
Businesses are asking for more time with no payments on their emergency Covid loans on top of the extra time that the Government has already announced, according to new data.
Out of 500 businesses that are seeking repayment plans, 83% had asked for all the payment holidays they could get or even a full year of no payments on their Bounce Back Loans.
The data comes from resourcing company Momenta Group, which is helping banks collect repayments from companies that borrowed during the pandemic.
The number one request Momenta is getting from businesses is to add another 12-month interest-free payment deferral.
Companies who took a Bounce Back Loan were originally given a year of no repayments, where the Government picked up the 2.5% interest on their loans.
However after the first 12 months companies had to start repaying. The Government said that it would give firms another six-month interest and repayment holiday, and three six-month interest holidays.
However, companies will still need to pay the interest, which will build up over this period. For many, this is not enough help, the Momenta statistics show.
Momenta chief executive Richard Stevens said: “While the Government and banks have made available a number of unusually generous repayment options, there is a specific cohort of SMEs (small and medium sized enterprises) who are in the mire.
“Of these businesses struggling to repay, the majority have asked for an extension of the popular interest-free payment holidays for an additional year beyond what has already been offered.
“Of concern is that businesses struggling to repay have requested this complete repayment moratorium over schemes such as Pay As You Grow which is already in place to ease repayment process.”
He added: “There is immense financial pressure on business owners from all angles – not least from the slow recovery of sales and the end of the furlough scheme, but the shortage of additional labour due to the onset of Brexit compounded with the increasing costs of certain raw materials and supply shortages.
“From our perspective, it’s these combined reasons which have required additional skilled collections professionals to empathise and negotiate repayment plans, as well as compliance and credit analyst team members to review lending processes.”
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