Companies are demanding more time to pay back Covid loans, data shows


Companies are demanding more time with no payments for their emergency Covid loans on top of the extra time the government has already announced according to new data.

Of 500 companies seeking repayment plans, 83% asked for any payment vacation they could get, or even an entire year with no payments on their bounce-back loans.

The data comes from procurement company Momenta Group, which is helping banks collect repayments from companies that took out loans during the pandemic.

The main request Momenta is getting from companies is to add another 12 month interest-free grace period.

Companies that took out a bounce-back loan were originally given a year of no repayment during which the government would collect the 2.5% interest on their loans.

However, after the first 12 months, companies had to start repaying. The government said it would give companies an additional six-month interest and repayment vacation, as well as three six-month interest vacation.

However, companies will still have to pay the interest that accumulates over this period. For many, this is not enough help, as the momenta statistics show.

Momenta chief Richard Stevens said, “While the government and banks have provided a number of unusually generous repayment options, there is a certain cohort of SMEs (small and medium-sized enterprises) that are in the quagmire.

“Of those companies struggling with repayment, the majority have requested an extension of the popular interest-free payment vacation for another year beyond what was already on offer.

“What is worrying is that companies struggling to make the repayment have requested this full repayment moratorium over systems like Pay As You Grow that are already in place to simplify the repayment process.”

He added: “There is immense financial pressure on entrepreneurs from all angles – not least due to the slow recovery in sales and the end of the vacation schedule, but also the lack of additional manpower due to the beginning of Brexit and the rising costs for certain Raw materials and delivery bottlenecks.

“In our view, it is these combined reasons that have required additional qualified debt collection experts to understand and negotiate repayment plans, as well as members of the compliance and credit analyst team to review credit processes.”

About Nina Snider

Check Also

Digital Lending Platforms Market Size, Share, Trends, Outlook and Forecast to 2029 – SMU Daily Mustang

New Jersey, United States – That Digital Lending Platforms Market The report includes the upcoming …

Leave a Reply

Your email address will not be published.