‘Thousands’ of businesses threatened with bankruptcy over exorbitant interest charges on Covid loans



Tens of thousands of businesses could go up against the wall over high interest payments that they claim they don’t fully understand and say they can’t survive unless some of them are written off.

Small businesses say they are now struggling under the weight of loan repayments

Business owners threatened with eviction and angst plan to sue the government for bounce back loans unless some of the crippling repayments are canceled.

These loans were intended to help businesses weather the pandemic by allowing them to borrow between £ 2,000 and 25% of a company’s turnover up to £ 50,000.

The government said he would recover the 2.5% interest charged by banks and mortgage companies for the first year.

But a new campaign called Back British Business says many businesses are now struggling under the weight of these refunds and feeling misled by the government.

The campaign says companies could default on £ 22bn of those loans, around 30% of the £ 74bn loaned under the scheme – unless the government steps in.

He is prepared to sue the government unless it helps it.

One company in difficulty is the FoxPrint in Leicestershire, which employs nine people.

Anne-Mari Niemela, 51, runs the business and has taken out £ 50,000 in Bounce bank loans which she is struggling to repay.

She said: “We thought our business would get back on its feet very quickly, but the repeated blockages meant everything was stop / start. It didn’t give us any luck.

“I’m only paying the interest and I think we’ll be dealing with this debt for five to seven years.

Is your business struggling with these loan repayments? Message [email protected]

Anne-Mari Niemela says businesses like hers have found themselves with few options because of the loans


Anne-Mari Niemela)

“It affected a lot of people Mental Health .

“I am now on antidepressants and my relationship with my partner has broken down due to all the stress.”

Another small business owner is Blair Barnette, 51, who runs a television production company.

She took out £ 22,000 in Bounce Back loans when TVs were shut down due to the pandemic .

But she ended up getting kicked out of her home because of the weight of the refunds.

She said: “Initially, I applied for a regular bank loan for a short period because I was completely excluded from government support and had no income. I just didn’t know how I was going to spend a few months.

The loans were first announced by Chancellor Rishi Sunak


Getty Images)

“The bank said, ‘Wait, wait about a week for a new loan to come in, backed by the government. If there is a problem, the government will back it up and they won’t come after you. You will be safe. and that will get you through.

“I thought that would close the gap and I would start working soon and I would have time to pay it back. But now they are starting to hunt.

“I haven’t caught up yet and I have no possible way of repaying the schedule they would like.

“I’m about to close my business because I don’t see how to get out of it.

“I feel anxious almost every morning and I don’t sleep well. My health has changed dramatically and I don’t know how I can cope on my own. I don’t feel the support.

Back British Business said that “tens of thousands of businesses are at risk of bankruptcy as they grapple with repayments.”

The campaign said many companies believed they could take out loans during the first foreclosure and then repay them quickly once they started trading again.

But the continued lockdowns meant that many ended up accumulating interest but were unable to swap to pay it back.

Now the campaign thinks it can sue the government at common law, by simply asking a court whether it is fair and just for the loans to be repaid.

Back British Business Managing Director Wasif Mahmood said: “The campaign claims the loans are unreasonable and unenforceable due to repeated blockages and confusing directions like the pandemic unfolded , with many companies mistakenly believing that they would be able to get on with business quickly.

“At the time the loans were announced, the government said the pandemic was under control and lockdowns would be of limited duration to prevent the NHS from being overwhelmed.

“The loans seemed reasonable for particular business owners, many of whom were excluded from any form of leave or grant, to say, yes, we can survive that – if we take a loan, we can then trade to pay it back. .

“The problem is that the goal posts have been moved – and repeatedly – resulting in an uneven playing field.”

Wasif Mahmood leads campaign to help businesses survive loan repayments


Louis Amour)

Mahmood said many companies took out their loans on the understanding that the government would support them if they could not afford to repay them.

The campaign calls on the government to consider calls to save small businesses and to cancel all or part of their loans.

Mahmood said: “Allowing these companies to go to the wall is in no one’s best interest.”

A government spokesperson said: “Since the start of the pandemic, our priority has been to protect jobs and livelihoods, which is why we have acted quickly to launch these programs, which have helped more than one million businesses.

“We have always been clear that this is loans, not grants, while ensuring that businesses can repay their loans on terms that work best for them through our Pay as you Grow measures.”

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