30 June 2020

How to get your business out from under the COVID-19 debt mountain

Growth businesses face owing £105bn in debt because of COVID-19. Angus Grierson, Managing Director of LGB Corporate Finance, shows the various ways you can escape the debt mountain.

 

What does the COVID-19 debt mountain look like?

The pandemic has resulted in an unprecedented COVID-19 debt mountain for SMEs and mid-market companies, with recent estimates reporting this could exceed £105bn by March 2021.

To help struggling companies, the government has introduced two main stimulus initiatives: the coronavirus business interruption loan scheme (CBILS) and coronavirus large business interruption loan scheme (CLBILS), with the latter aimed at larger companies.

While these measures are laudable and necessary, there is a fear many of the resulting government guaranteed loans will be unsustainable.

According to TheCityUK, £36bn in Covid-19 emergency loans to small businesses are at risk of turning toxic. To make matters worse, even before the crisis, UK SMEs faced £23.4bn in late payments, creating a vicious cycle as the pandemic struck.

To address this challenge, TheCityUK has established a Recapitalisation Group (RCG) which is working to understand and identify mechanisms to support the recapitalisation of UK businesses which have needed to take on additional debt in response to Covid-19. On June 8, RCG published an interim update that set out the scope of the challenge, considers the sectors most likely to need support, explores how private sector capital could be mobilised and identifies gaps that could remain for the public sector. It also discusses key challenges for any proposed solutions to ensure they work for business right across the UK. RCG then plans to publish final recommendations in July.

 

To read the full article, please click here.

Recent Articles

7 September 2020

Back British biotech by improving the clinical trials process

Andrew Boyle, CEO of LGB & Co. Limited, wrote an article for Pharmiweb on how to improve the British biotech sector.

Read more

News & Insights

1 September 2020

Is it safe to get back in the water? SME credit investments in the post-Covid world

Please join us to hear from our expert panel on how investors are viewing the market and assessing SME risk and resilience over the next 6 months and beyond. Read more

News & Insights

27 August 2020

COVID-19 is causing a renaissance in the UK biotech sector, we must ensure it lasts

Andrew Boyle, CEO of LGB & Co. Limited, wrote an article published in PharmaPhorum on the impact COVID-19 is having on the biotech sector in the UK.

Read more

News & Insights