Virus creates huge surge in business loans

Net borrowing by UK companies this year is expected to be more than five times higher than in 2019 as businesses seek to survive the coronavirus crisis and most will not begin paying it off for more than a year.

Bank lending has been vital during the pandemic as revenues and cashflows have been disrupted and banks had issued £43.2 billion up until August to non-financial companies, net of repayments, almost five times more than the £8.8 billion in the whole of last year, according to a report by EY Item Club.

It predicted that most businesses will only start repaying this debt and cut borrowing from 2022, as long as pre-crisis economic conditions have returned. It could be later still if new lockdowns materially affect the return to “more normal” economic conditions.

Source: bmmagazine
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