An article from The Financial Times has revealed that small businesses in the UK are seeking advice on ways to escape dangerous levels of debt built up in government-backed loans during the Covid-19 pandemic, with some considering prepack administrations.<\/p>\n
Begbies Traynor, the listed restructuring company, said its analysis showed more than half of UK businesses were carrying \u201ctoxic debt\u201d that they might struggle to repay over the next 12 months.<\/p>\n
The high percentage of companies with toxic debt across sectors and the rising debt of corporate UK is alarming. Company insolvencies rose to 1,446 in September, up by 100 from August and 56 per cent higher than the same month last year, according to the Insolvency Service.<\/p>\n
Small business debt shot up last year after the pandemic forced many companies to turn to government-backed bank debt to survive.<\/p>\n
The UK government last year offered to guarantee bank loans through various support schemes, with more than \u00a375bn of debt now backed by a full or partial guarantee by the state. This includes about \u00a347bn in so-called \u201cbounce back\u201d loans that offered up to \u00a350,000 for struggling small businesses with relatively little paperwork.<\/p>\n