Millions of jobs and thousands of businesses are on the brink due to unmanageable levels of debt and repayment concerns, unless the HM Treasury urgently acts to turn its coronavirus business loan schemes into grants, Patricia Gibson MP has warned.
It comes after financial services body TheCityUK highlighted in its report that the "unsustainable debt challenge poses a real threat to UK jobs," with the group estimating that around 750,000 small and medium-sized businesses and three million jobs are at risk.
The report suggested measures which include converting the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) debt into grants, equity and longer-term repayment options. It concludes that before March 2021, even this year, a number of sectors are "expected to come under strain given challenging trading conditions, accumulating operating losses and the tapering of government stimulus including the furlough scheme."
UK banks have raised dire warnings that up to half of the loans issued under the BBLS cannot be paid back by hundreds of thousands of small businesses pushed into hardship.
Patricia Gibson MP said:
"The Treasury’s coronavirus financial support schemes have been welcome. However, it's clear that they fail to address the severe financial pressure burdening small and medium-sized businesses in the long run.
"With warnings growing of the hardship and unmanageable levels of debt facing hundreds of thousands of firms - potentially costing around three million jobs - it's critical that UK Government takes urgent steps to protect firms that are on the brink.
"The Scottish National Party (SNP) has repeatedly called on the Treasury to turn its CBILS and BBLS schemes into grants to protect small and medium-sized businesses and ensure their long-term survival. If it does not do so, many businesses will be left with no choice but to pull down their shutters.
"It must also heed the calls to extend the furlough scheme, as moves to truncate and then end it will jeopardise economic recovery. The threat to jobs is growing and it is vital that dithering UK Ministers act boldly now, if we are to avoid mass redundancies and closures in the months to come.
"The SNP continues to press for the powers and serious investment that other independent countries are already implementing to safeguard jobs, protect businesses and kickstart their economies."