The Institute of Directors (IoD) has warned that business debt will hinder the economic recovery from the coronavirus (COVID-19) unless steps are taken to make the burden more manageable.
The IoD polled 720 company directors and found that 51% believe that debt their company has taken on during the pandemic will have a negative impact on their recovery. 57% said that debt will hold back their investment plans for the next two years.
The business group is calling on the government, banks and businesses to work together in order to deal with the ‘debt mountain’ faced by UK firms. The IoD has proposed that small businesses should be able to convert government-backed loans into ‘student loans’ and make repayments once the business turns a profit.
‘During the crisis, government loans have been a lifejacket for business, but they could become an anchor dragging back the recovery,’ said Jonathan Geldart, Director General of the IoD.
‘If we don’t deal with the debt mountain businesses have had to take on because of coronavirus, the economy will take much longer to heal.’