Economic recovery and mounting loan debts
Recent reports from OBR are optimistic about the UK’s economic recovery, predicting the UK’s GDP will return to pre-crisis levels by the middle of 2022. However, Kroll’s independent survey finds that it may take businesses up to 5 years to see economic recovery. Especially as small businesses will face further tests, such as the repayment of loan scheme debt. Will the UK businesses, and business owners, come out of the pandemic unscathed, or will they crumble under mounting loan debts?
Loan debts due
Since the start of the pandemic, cash-strapped businesses have received over £75bn through emergency support. Schemes, backed by the taxpayer, were offered on an interest-free basis for 12 months. As the deadline to call in loans is looming, major banks staff are undergoing empathy training before they ramp up their demands.
Debt drives mental health crisis
The pandemic has deepened a mental health and debt connection. In February, the Financial Conduct Authority warned that more than a quarter of Brits have low financial resilience, an increase of 3.5 million compared to March 2020. Later that month, the FCA issued guidance to firms instructing them on how to treat vulnerable customers.
However, the Court of Appeal ruled that banks are under no implied duty to exercise reasonable care and skill during the recovery process. And without protections embedded in legislation, millions of vulnerable clients will suffer.
Escaping the burden of debt
Debt can easily spill into all aspects of our lives, leaving people feeling alienated and not knowing where to turn. When managing money gets harder, it often creates a vicious cycle for the person in debt. Recognising there is a problem and confronting it is the first step towards addressing the financial issues in your business.
If your business is struggling and you need help with understanding your options, don’t put it off. Contact us today on 0800 118 2948.
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