Burden on investment

Offer firms ‘student loan’ format to repay debt, says IoD

Malcolm Cannon

Malcolm Cannon: ‘flexibility would allow businesses to get back on their feet

Small companies should be able to convert government-backed debt support into ‘student-type loans’, with repayments kicking in once they have turned a profit, says a business group.

Companies would repay a percentage of what they earn over a certain time period, in a manner similar to student loans.

The Institute of Directors says this could give small businesses more breathing space to invest and grow as they make repayments, while potentially lowering the risk of loan defaults.

Of those surveyed who had taken on debt, four out of ten said that restructuring into the student loan format would be best for their organisation, compared with only 5% who favoured converting the debt into equity held by a public body.

The IoD says government, banks, and businesses need to work together to deal with the debt mountain firms face, to enable them to invest and heal the economy and the student loan format may be a solution.

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