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Businesses ask for more time to repay Covid loans, data shows

Companies are asking for extra time with no funds on their emergency Covid loans on prime of the additional time that the Government has already introduced, in response to new information.

Out of 500 companies which are looking for compensation plans, 83% had requested for all of the cost holidays they might get or perhaps a full yr of no funds on their Bounce Again Loans.

The info comes from resourcing firm Momenta Group, which helps banks gather repayments from firms that borrowed in the course of the pandemic.

The primary request Momenta is getting from companies is so as to add one other 12-month interest-free cost deferral.

Corporations who took a Bounce Again Mortgage have been initially given a yr of no repayments, the place the Authorities picked up the two.5% curiosity on their loans.

Nonetheless after the primary 12 months firms needed to begin repaying. The Authorities stated that it will give corporations one other six-month curiosity and compensation vacation, and three six-month curiosity holidays.

Nonetheless, firms will nonetheless must pay the curiosity, which is able to construct up over this era. For a lot of, this isn’t sufficient assist, the Momenta statistics present.

Momenta chief govt Richard Stevens stated: “Whereas the Authorities and banks have made out there a variety of unusually beneficiant compensation choices, there’s a particular cohort of SMEs (small and medium sized enterprises) who’re within the mire.

“Of those companies struggling to repay, the bulk have requested for an extension of the favored interest-free cost holidays for an extra yr past what has already been supplied.

“Of concern is that companies struggling to repay have requested this whole compensation moratorium over schemes comparable to Pay As You Develop which is already in place to ease compensation course of.”

He added: “There may be immense monetary strain on enterprise homeowners from all angles – not least from the gradual restoration of gross sales and the top of the furlough scheme, however the scarcity of further labour because of the onset of Brexit compounded with the rising prices of sure uncooked supplies and provide shortages.

“From our perspective, it’s these mixed causes which have required further expert collections professionals to empathise and negotiate compensation plans, in addition to compliance and credit score analyst group members to overview lending processes.”

 

 

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